7
The European
Smaller
Companies
Trust PLC
Annual Report 2025
JHI9228/2025The European Smaller Companies Trust PLC – Annual Report 2025
The European Smaller Companies Trust PLC
Registered as an investment company in England and Wales
Registration Number 2520734
Registered office: 201 Bishopsgate, London EC2M 3AE
SEDOL/ISIN number: Ordinary Shares: BMCF868/GB00BMCF8689
London Stock Exchange (TIDM) Code: ESCT
Global Intermediary Identification Number (GIIN): JX9KYH.99999.SL.826
Legal Entity Identifier (LEI): 213800N1B1HCQG2W4V90
Telephone: 020 7818 1818
Email: ITSecretariat@janushenderson.com
www.europeansmallercompaniestrust.com
JHI9228/2025Typeset by 2112 Communications, London. Printed by Paragon Leycol.
This report is printed on Revive 100 Silk manufactured from FSC
®
Recycled certified fibre
derived from 100% pre and post-consumer waste at a mill certified with ISO 14001
environmental management standard.
The pulp used in this product is bleached usingan Elemental Chlorine Free process.
This product is made of material from well-managed FSC
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materials, and other controlled sources.
The European Smaller Companies Trust PLC Annual Report 2025
Strategic Report
Performance highlights 1
Why invest? 2
Chairman’s statement 4
Fund Manager’s report 7
Portfolio information 11
Historical information 12
Business model 13
Managing risks 17
Responsible investment 19
Key Performance Indicators 23
Governance
Board of Directors 26
Corporate Governance Report 28
Audit Committee Report 34
Management Engagement Committee
Report 36
Nomination and Remuneration
Committee Report 37
Directors’ Remuneration Report 39
Directors’ Report 43
Statement of Directors’ Responsibilities 45
Financial Statements
Independent auditor’s report 47
Financial statements 55
Notes 59
Additional information
Investment portfolio 78
Alternative performance measures 81
Glossary 83
General shareholder information 84
Service providers 85
Notice of Annual General Meeting 86
Our purpose is to deliver a long-term sustainable return
to shareholders from investing in smaller and medium sized
European companies.
Front cover:
ZEISS
Percentage of portfolio: 0.8%
Geographical area: Germany
Manufacturer of optical systems
andoptoelectronics.
Performance at 30 June
NAV per share at year end
1, 2
2025 2024
224.45p 201.01p
Dividend for year
3
2025 2024
4.90p 4.80p
Ongoing charge excluding the performance fee
5, 2
2025 2024
0.68% 0.67%
Share price at year end
2025 2024
211.50p 178.40p
Net assets
4
2025 2024
£511m £799m
Ongoing charge including performance fee
5, 2
2025 2024
0.93% 0.75%
Dividends paid
0
1
2
3
4
5
Pence
Dividend
2020 2021 2023 202520242022201920182016 2017
2.76
3.13
4.70
4.80
4.90
4.35
2.75
1.81
1.44
2.38
Total return performance for the 10 years to 30 June 2025 (rebased to 100)
6, 2
%
50
100
150
200
250
300
350
Share price
Investment Association European Smaller Companies
NAV AIC sector
7
Benchmark
8
EAA Fund Europe Small-Cap Equity (Morningstar category)
Jun
15
Jun
16
Jun
17
Jun
18
Jun
19
Jun
20
Jun
21
Jun
22
Jun
25
Jun
24
Jun
23
1 Net Asset Value (‘NAV’) per ordinary share
2 The NAV per share, NAV total return, share price total return and ongoing charge are Alternative Performance Measures. More information on these can be found
on pages 81 and 82
3 Includes the first and second interim dividends in respect of the year ended 30 June 2025
4 Following the 42.5% tender offer which closed on 27 June 2025
5 Calculated using the methodology prescribed by the Association of Investment Companies (‘AIC’)
6 NAV total return assumes all dividends are re-invested
7 European Smaller Companies sector
8 MSCI Europe ex UK Small Cap Index
Sources: Morningstar Direct, Janus Henderson Investors
A glossary of terms can be found on page 83
The European Smaller Companies Trust PLC Annual Report 2025
1
Why invest in small and medium sized
Europeancompanies?
Source:Morningstar Direct 1 Based on 2018 prices
Small caps have a long term record of outperforming large caps (index total return %, rebased to 100)
Jun
01
Jun
02
Jun
03
Jun
04
Jun
05
Jun
06
Jun
07
Jun
08
Jun
09
Jun
10
Jun
11
Jun
12
Jun
13
Jun
14
Jun
15
Jun
16
Jun
17
Jun
18
Jun
19
Jun
24
Jun
25
Jun
23
Jun
22
Jun
21
Jun
20
US Equities (S&P 500)
European Small Caps (MSCI Europe ex UK Small Cap Index) European Large Caps (MSCI Europe ex UK Index)
%
0
100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
The smaller companies sector is an imperfect market which
is ideal for active fund management. It offers exposure to
high growth niches such as:
Small cap has a larger universe to choose from, stocks are
less well covered by analysts meaning a greater opportunity
to find mispriced securities
e-commerce
Circular
economy
€
Warehouse
automation
Fintech
€
Europe ex UK
NUMBER OF STOCKS
AVERAGE NUMBER
OF SELL SIDE
ANALYST COVERAGE
market cap >£5b
market cap £100m to £5b
1,879
524
15
4
The spending will be focused on
digital and green infrastructure.
This marks the first-ever mutually
financed stimulus programme
and lays the framework for a
period of greater political stability
on the Continent.
The EU has announced:
‘Next Generation EU’;
amounting to €750bn
1
€390b grants
+
€360b loans
Going forward
growth will be
aided by
recovery/green fund
The European Smaller Companies Trust PLC Annual Report 2025
2
Source: Janus Henderson Investors
Why invest in this Company?
Balanced portfolio seeking attractive valuations and high growth opportunities
The European Smaller Companies Trust
Implications for
OUR INVESTORS
Alpha-driven and
not wedded to a
particular style
Deep-Value
Micro Giant
High-Growth
JPMorgan European Discovery
Montanaro European Smaller
Source: Morningstar at 30 June 2025
TRUE SMALL
CAP
VALUATION-
AWARE
APPROACH
INVESTING
ACROSS THE
COMPANY
LIFE CYCLE
Lower average market cap
than peers – circa 40% of
the portfolio in stocks with
a free float <€1b
Willing to look at neglected
areas of the market –
mature and turnaround
situations as well as quality
growth opportunities
We buy companies where
the market misperceives
the true fundamental value
Return on Invested
Capital (‘ROIC’)
1
4
3
2
Shows a recent history
or forecast of improving
return on invested
capital accompanied
by strong sales growth
(in excess of 10%
forecast typically).
Exhibits consistently
above cost of capital
ROIC and shows above
GDP level growth on an
organic or M&A basis.
Consistently earns ROIC
in and around the cost
of capital.
Earns ROIC below cost
of capital, or significantly
below comparable
industry peers, with
forecast expectations of
improvements in ROIC
over time.
Turnaround
Mature
Quality Growth
Early
Cycle
Quality Growth Mature TurnaroundEarly Cycle
We take exposure across the four phases of the corporate lifecycle
Investing across the corporate lifecycle
The European Smaller Companies Trust PLC Annual Report 2025
3
Chairman’s
statement
“ Many things have
happened since I took on
the Chairmanship last
year and I would like to
thank our shareholders
for their support
throughout this
transformational year
”
The Chairman of the Board,
James Williams reports
on the year to 30 June 2025
NTG Nordic Transport, 0.4% of the portfolio
Provider of customizable transportation services
4
When I wrote to you in February, I certainly did not anticipate
that the second half of this financial year would be equally
aseventful as the first. In this instance though, I was very
pleased to be proved wrong when we announced the
combination with European Assets Trust PLC (‘EAT’) on
23June 2025.
This transaction completed on 15 October 2025 and I would
like to take this opportunity to extend a warm welcome to
these new shareholders.
Following completion, the Company has net assets of
£811.9m, once again making it the largest constituent of the
AIC European Smaller Companies sector. With size comes the
benefit of improved liquidity in the secondary market and we
have further negotiated a reduction in the management fee
meaning all shareholders should benefit from a reduced
ongoing charge in the fullness of time. Our investment
manager is also making a cost contribution to the combination
so that our shareholders are largely insulated from the costs
associated with the transaction.
CT Savings Plans participants
A number of former EAT shareholders hold their new ESCT
shares in a saving scheme managed by Columbia
Threadneedle, known as the CT Savings Plans. CT Savings
Plans participants will have until 14 January 2026 to transfer
their new ESCT shares to their own platform otherwise the
shares will automatically be sold by the scheme administrator.
I encourage all CT Savings Plans participants to transfer their
new ESCT shares well before the deadline of 14 January 2026.
Performance
The net asset value total return for the year ended 30 June
2025 was 14.5%, marginally ahead of the benchmark at
14.0%. The net asset value total return for the three years to
this date was 49.4% against the benchmark of 38.0% and
over five years, 92.8% compared to the benchmark of 56.0%.
This once again demonstrates the long-term strength of our
fund management team’s balanced and valuation aware
approach. The Fund Manager and his team provide a more
detailed review of their stock selections in their report.
The share price total return for the year to 30 June 2025
was21.9%.
Discount management
The Company maintains a mid-single digit discount target
andthe discount at the year end was 5.8%. This was
comfortably within the 12-month daily average discount for
the sector of 8.3%.
Succession planning
At the forthcoming annual general meeting, Simona
Heidempergher will be retiring as a director. My Board
colleagues and I thank her very much for her contribution to
our discussions throughout her tenure. Her background in
private equity and presence on the Continent has provided
valuable insight to our deliberations.
As part of our ongoing succession planning, we appointed
Nadia Meier-Kirner as a director on 28 April 2025. Nadia is
based in Germany and has extensive experience in the
European mid-to-small cap investment area.
The combination with EAT also means that we are welcoming
two directors from that trust to our Board. Stuart Paterson
and Kate Cornish-Bowden joined theBoard following
completion of the combination. Details on their experience
and background can be found in the directors’ biography
section of this annualreport.
Shareholders will have the opportunity to meet Nadia, Stuart
and Kate when they stand for election at the annual general
meeting later this year.
New dividend policy
Following completion of the combination with EAT, we
introduced our new dividend policy ofpaying quarterly
dividends in respect of each financial year,targeting a total of
at least 5.0% of the net asset value per share at the end of the
preceding financial year. The Company’s investment focus will
remain capital growth, with the dividend paid from income,
capital returns and reserves.
We anticipate paying three interim dividends for the year
ending 30 June 2026, with the first being paid in February
2026, followed by payments in May and August.
Under the new approach, a resolution to approve the dividend
policy will be put to a shareholder vote at the forthcoming
annual general meeting, and each subsequent annual general
meeting, providing shareholders with the opportunity to
formally indicate to the Board their views on the dividend policy.
Second interim dividend
To ensure our existing shareholders received their second
dividend in respect of the financial year just ended, the
Boarddeclared a further interim dividend in the amount of
3.45p per ordinary share which was paid to shareholders on
8October 2025.
This brought the total dividend for the year ended 30 June
2025 to 4.90p per share, representing a 2.1% increase on
theprior year.
Tender offer
In my communication to shareholders in February I referred to
our ongoing discussions with Saba Capital Management, L.P.
(‘Saba’) following the two requisitions which they lodged with
the Company. The first requisition was very disruptive and
resulted in a financial cost to the Company, and we believed
that convening a general meeting in response to the second
requisition would not be in the best interests of all shareholders.
In order to protect the interests of those shareholders wishing
to continue their investment in the Company, the Board
Chairman’s statement
The European Smaller Companies Trust PLC Annual Report 2025
5
concluded that it would find a solution that would allow
shareholders who wished to exit their position in the Company
the opportunity to do so. This resulted in the 42.5% tender
offer which concluded on 26 June 2025.
I am pleased to report that Saba’s holding in the Company’s
shares was successfully reduced to an insignificant level
following the tender offer and we now look forward to being
able to focus on our primary objective of delivering returns
toshareholders.
Annual General Meeting
The 35th Annual General Meeting of the Company will be held
at 12.30 pm on Monday, 24 November 2025 at the offices of our
investment manager at 201 Bishopsgate, London, EC2M 3AE.
This event provides shareholders with the opportunity to meet
their directors and the fund management team in person, as
well as to raise any questions or concerns they may have
regarding the running of the Company.
The Fund Manager will give his usual presentation on the year
under review and the outlook for the year ahead.
We encourage all shareholders to attend if they can or join us
online if they are unable to be with us in person.
Continuation vote
Every third year, shareholders have the opportunity to vote
onwhether they wish to continue the life of the Company.
Such a resolution will be proposed at the forthcoming annual
general meeting.
The Company’s performance track record speaks for itself
and we believe the strategy of investing in European smaller
companies continues to represent an attractive opportunity
for both long-term capital growth and dividend income.
Thisobjective is particularly well suited to benefit from the
investment trust structure.
The Board encourages all shareholders to support the
resolution by voting in favour, as we intend to do in respect
ofour own holdings.
Outlook
The 2020s have been an eventful decade so far and it has
resulted in a number of challenges for Europe, many of which
still remain. War in Ukraine and combative Trumpian foreign
and economic policy are the most pressing, with poor policy
choices in the UK and France also creating challenges.
However, inflation has been tamed and interest rates have
begun to come down and may have further to go. German
fiscal policy will soon be expansionary for the first time since
the Eurozone crisis and despite better performance in 2025,
the European smaller companies asset class remains
attractively valued. There are a number of small companies for
your managers to take advantage of that are quietly driving
progress in important areas such as defence and technology.
There is much to be optimistic about.
Many things have happened since I took on the Chairmanship
last year and I would like to thank our shareholders for their
support throughout this transformational year. It is satisfying
to see how well the Company has managed the numerous
challenges while maintaining excellent performance, and
emerging in good shape to continue generating market-
leading shareholder returns.
James Williams
Chairman
20 October 2025
Chairman’s statement (continued)
The European Smaller Companies Trust PLC Annual Report 2025
6
Fund
Manager’s
Report
Ollie Beckett
Fund Manager
Julia Scheufler
Deputy Fund Manager
Rory Stokes
Deputy Fund Manager
Bilfinger, 0.6% of the portfolio
Multinational company specialising in civil and
industrial construction and engineering
7
Fund Manager’s report
Equity markets were buoyant in the second half of our
financial year, during which we delivered a strong relative
performance. This enabled us to close the year with a NAV
increase of 14.5%, slightly ahead of the benchmark, following
a disappointing first half.
The year unfolded in two distinct halves: the first weighed
down by political discord that dampened economic
momentum, and the second marked by a resurgence of
optimism across the European economy. Unexpected early
elections in the UK, snap legislative elections in France
following the poor showing of President Macron’s party in the
European elections, mounting uncertainty around the US
presidential race, and the eventual collapse of Germany’s
traffic-light coalition (SPD, FDP and Greens) all contributed
toa climate of hesitation. Globally, companies delayed key
decisions, awaiting greater political clarity.
In the UK, a decisive Labour landslide brought stability, in
contrast to France, where no party emerged with a clear
mandate – though a fragile, and unsustainable, equilibrium
has since taken hold, with none of the major blocs eager
totrigger another election. The pivotal moment came from
Germany, where Chancellor Merz forged a new Grand
Coalition between the CDU/CSU and SPD. In a bold move,
hescrapped the long-standing ‘Debt Brake’ unlocking
long-overdue investment in infrastructure. Spurred by
pressure from US Vice-President Vance and the enduring
criticism from President Trump over Europe’s defence
spending, Merz recognised the need for Europe to bolster its
own security in an increasingly volatile world. This shift has
ignited a renaissance in European equity markets, further
fuelled by erratic economic policymaking from the new US
administration. A weakening US dollar and growing scepticism
around American exceptionalism have prompted investors to
re-evaluate the compelling opportunities within European
markets.
After the stock market’s recent obsession with ‘The
Magnificent Seven’ (Alphabet (Google), Amazon, Apple,
Microsoft, Meta (Facebook), Nvidia and Tesla) it was welcome
to see interest in Europe. The concentration in global equity
markets in the US and, in particular, the ‘Mega Cap Tech
stocks’ remains a feature; the volatility of these companies
has led to a miserable period for investors and there is
enormous scope for the market to broaden from here,
benefiting our area of European smaller companies. Aswe sit
here today, there is good economic growth in Southern
Europe, a nascent recovery in Northern Europe and the
prospect of fiscal stimulus in core Europe to help drive growth
across the continent. Inflation has been tame; interest rates
are coming down and energy costs have normalised
somewhat. Many of the headwinds for the continent are
becoming tailwinds.
Zooming in on the contributors to performance in the portfolio
adds detail to that macro picture with our positions in
Germany, infrastructure, defence and financials being the
principal boosters. German listed speciality chemical
producer Alzchem was the largest contributor. The company
has some superb niches that it dominates in chemicals such
as creatine and nitroguanidine. Creatine is a chemical
compound, naturally produced in the body, that supplies
energy to muscles. Synthetic creatine is a dietary supplement
of which Alzchem is the only western producer. Historically it
was taken by bodybuilders to aid training in the gym, but it is
increasingly being taken by those at risk of suffering from
sarcopenia and osteoporosis, as well as being recommended
for those taking GLP-1 weight loss drugs who often suffer
muscle wastage during treatment. Nitroguanidine is a
propellant that goes into car air bags and is a key ingredient in
NATO ammunition. The labels ‘Germany’ and ‘defence’ whilst
combined with the company pushing through the €1billion
market cap threshold that is a minimum cut off for many
investors, has given the stock a big multiple rerating, and
there is plenty more to go for.
Infrastructure has also been a key theme. Swiss listed
producer of power transformers, R&S Group, has been
another big contributor to performance. Transformers are
used to shift electricity between alternating current (‘AC’) and
direct current (‘DC’). The electricity grid is run on AC as it is
easier to transmit over long distance, but most electronic
devices require DC to work. Transformers switch the current
from AC to DC and manage the voltage. The electricity grids
in Europe were largely built in the two decades after the
Second World War and are now in need of replacing and
upgrading to cope with the demands imposed on them by the
Green Transition. R&S Group is wonderfully placed to take
advantage of this multi-year upgrade requirement.
Sentiment towards financials has seen a huge shift over the
last few years. The sector was wildly out of fashion following
the Global Financial and Eurozone crises. However, since the
inflation shock following excessive fiscal and monetary
stimulus during the pandemic, we have seen an interest rate
cycle and a sector characterised by low return on equity, has
seen a revival. The portfolio has benefited from positions in
southern European banks such as Greek listed Alpha Bank
and Optima Bank; Portuguese listed Banco Comercial
Portugues; and Italian listed Credito Emiliano. The biggest
contributor from the sector has been Dutch listed Van
Lanschot Kempen which has done an excellent job of
transforming itself from a poorly run restructuring case, to the
pre-eminent wealth manager in the BENELUX.
The Portfolio
Amid volatile markets and fraught geo-politics, we endeavour
to remain true to our investment strategy of investing across
the corporate lifecycle with a balance of early-stage growth
stocks, high return on capital growth compounders at
sensible prices, undervalued cash generative mature
companies and self-help turnaround stocks. We are
philosophically committed to reconciling the price we pay for
The European Smaller Companies Trust PLC Annual Report 2025
8
Fund Manager’s report (continued)
shares to the underlying fundamental cash generative capacity
of the company we use your capital to invest in. Our intention
is that the portfolio should be balanced, and whilst we have
valuation discipline and are ‘valuation aware’, we are most
certainly not running a value fund. We endeavour to ensure
that stock selection, rather than macro-economic factors,
iswhat drives performance, and we believe that company
management matters. The fund management team spend a
great deal of time meeting and assessing management teams
to evaluate if they understand where their companies fit in the
corporate lifecycle and how toadd value to the businesses
they are responsible for running. When we deploy your capital,
we want management teams to be thinking about the capital
allocation and distribution strategies of the company in the
context of the price the stockmarket puts upon their equity.
One such company management team is at IG Group, where
the management team has used the ferocious cash generation
of the company to pursue substantial share buybacks that
have helped the stock be one of the Company’s top
contributors. We don’t normally invest in UK listed companies,
but used the flexibility offered by the Board totake advantage
of this outstanding management team.
Performance Attribution
Contributions from French listed Exosens, a producer of
vision technology solutions primarily for the defence industry,
plus German pump manufacturer KSB, benefited
performance in the period.
Under normal circumstances, we shy away from stocks
exposed to drug discovery, however, we have made an
exception for German listed Eckert & Ziegler, a rare
manufacturer of radioactive components and isotope
products for medical, scientific and measurement purposes.
Radiopharmaceuticals is a rapidly growing market that, due
toregulatory barriers, has a limited number ofsuppliers.
Eckert & Ziegler are uniquely positioned as a vertically
integrated supplier to the pharmaceutical industry that wants
to deliver drugs that target specific cancerous areas of the
body, rather than radiate an entire person as part of cancer
treatment. As a result, the company has been winning an
increasing number of supply agreements for specific isotopes
and the shares have done well.
Nuclear exposure in the portfolio is not limited to the
pharmaceutical industry. Another strong contributor to
performance has been German listed pump manufacturer,
KSB, that supplies pumps to a variety of industries with
demand for high performance equipment, with the nuclear
industry being a big part of that demand. Not many people
will have heard of KSB, but their reactor coolant pumps are
helping supply zero carbon energy to much of the world and
this is yet another example of a hidden European champion.
The portfolio has been burdened by some poor active and
passive decision making in the year as well. Among the big
detractors have been Danish listed ferry operator, DFDS, that
has tarnished its reputation as a savvy allocator of capital with
a misguided expansion into Turkey that has seen good money
follow bad as they have had to buy out a customer or risk
losing volume to an aggressive new entrant. We are
advocating for value realisation from hidden assets on the
balance sheet. US listed, but French domiciled, advertising
platform company Criteo has had a weak year, with a couple
of large contract losses, the retirement of an admired CEO
and worries about the structural shift from internet search to
Artificial Intelligence (‘AI’) apps weighing on the share price.
We maintain faith that the company is well place to thrive in
the AI era and are persevering with the shares. German listed
semiconductor equipment manufacturer, SUESS MicroTec,
was a star performer last year but has been punished this
year as concerns about the duration of the AI capex cycle
have unsettled markets. We see SUESS MicroTec as a
multi-year margin expansion story that the market has yet to
fully understand and continue to hold our position. Another
2024 winner that has fallen on harder times is Dutch listed
geological data provider, Fugro, that has seen its business
hurt by the new US administration’s hostility to offshore wind.
Among the passive decisions that detracted from
performance has been the strength of: Austrian lender
BAWAG, Swiss heating, ventilation and air conditioning
equipment provider Belimo, German defence equipment
producer Hendsoldt and Italian bank Banca Monte del Paschi
de Siena. We were not invested in any of these stocks, and
they had such barnstorming performance that they collectively
accounted for a headwind compared to the benchmark in
excess of 2.0%. It is rare that our failures are so heavily
weighted to investments that we didn’t take, but reflect some
of the relative decisions we took, especially with regards to
investing in banks and defence names.
Geographical and sector distribution
Stock selection rather than geographical and sector exposure
is the fundamental core of our investment process, though we
are careful to monitor how we are positioned as part of our
risk management approach. We have never viewed the
benchmark as an input to our process and we are content to
diverge widely from it. Our valuation discipline typically leads
us away from the more expensive markets and sectors in
Europe and as a result we find ourselves underweight to
Switzerland and Sweden. Conversely, we are overweight to
Germany and the Netherlands where multiples are lower.
Similarly, we are underweight to the sectors where we
struggle to find value such as health care, utilities and real
estate. We are overweight to the industrials sector, as
valuations are very cheap and have scope for strong
performance as economies begin to grow again, as well as
being overweight to technology where we continue to see
strong structural growth trends.
The European Smaller Companies Trust PLC Annual Report 2025
9
Other purchases
Over the course of the year, we opened a number of new
positions in Spain, one of the bright spots in the European
economy in recent times. New investments include travel
technology company, HBX Group, that matches travellers
with hotel beds. The breadth of the hotel and travel agency
partners for the company is a network that is almost
impossible to economically replicate and after a shaky market
debut caused by a poorly executed Initial Public Offering
(‘IPO’), the stock has begun to perform. We also opened
positions in information technology company Indra Sistemas
which has substantial debt exposure, leading eye surgery
provider Clinica Baviera, sausage casing producer Viscofan
and leading Spanish housebuilder Neinor Homes.
The IPO market showed tentative signs of life and we
participated in two further new issues in the period that were
better handled than HBX Group. Swedish near prime lender,
Enity, got off to a strong start, as did German electric power
grid connector producer Pfisterer.
Other German names that we opened positions in included
semiconductor equipment manufacturer Aixtron;
ophthalmology equipment producer Carl Zeiss Meditec;
engineering services provider Bilfinger; and HomeToGo
theDACH region’s answer to AirBNB.
Other disposals
We exited our position in UK listed, but Dutch domiciled,
waste management service provider Renewi which was the
subject of a successful bid. We closed our position in French
listed glass bottler, Verallia, that was the subject of a tender
offer which risked impacting liquidity negatively. We took profit
from our positions in German defence gear-box manufacturer,
Renk, and Dutch listed manufacturer of military vision
goggles, Theon. We sold our positions in German listed
automotive supplier, Stabilus, upon concerns of negative
operating momentum and a stretched balance sheet and
Italian motorbike and moped producer, Piaggio, on concerns
around operating momentum, a risk to the dividend and
management refusal to unlock value in the business. We also
disposed of our positions in underperforming French
semiconductor material business, SOITEC, and UK listed/Irish
domiciled distributor to the hospitality industry and owner of
Magners Cider, C&C Group.
Currency
The Company is denominated in sterling, while investing in
largely euro-denominated assets. We do not hedge this
currency exposure.
Outlook
The surge of optimism that has manifested around European
equity markets since the start of 2025 has been welcome, as
has the mild narrowing of the extraordinarily large discount at
which European small cap was trading compared to
European large cap and US equity. A number of the
headwinds of recent years such as the supply chain shock,
the energy price shock, the resurrection of the inflation zombie
and an interest rate cycle have either abated or have become
positive tailwinds. The release of the German ‘Debt Brake’ can
provide a fiscal stimulus that can help sustain the European
economy for a few years, as might any simplification of
regulation which the EU can muster. These notes of optimism
need to be balanced with the risk of stagnating trade as the
tariff policies of President Trump bite and the seeming failure
for a resolution of the war in Ukraine, to lower tensions. In
many respects, the resilience of the global and European
economies in the face of all that has happened is quite
remarkable. After the initial bounce in our markets, we are
now at a point where operational improvement and earnings
momentum are required to drive the rerating of the market.
Hopefully politicians and regulators can get out of the way of
the market and allow some growth to thrive.
Notwithstanding the requirement for some momentum, our
market remains good value compared to other equity markets
and there are a wide variety of exciting investment
opportunities available to us. The European small cap market
has a broad range of undiscovered champions that are on the
forefront of much new technology, provide key cogs in the
wheels of the global economy and offer structural growth.
There are a large number of companies with enormous
potential to become great again under the right management.
We continue to hunt for mispriced opportunities across the
corporate lifecycle, whilst remaining ‘valuation aware’. We are
confident that we can find lucrative investment opportunities
for our shareholders.
Ollie Beckett, Rory Stokes and Julia Scheufler
20 October 2025
Fund Manager’s report (continued)
The European Smaller Companies Trust PLC Annual Report 2025
10
Portfolio Information
Ten largest investments at 30 June 2025
Ranking
2025
Ranking
2024 Company Principal activities
Geographical
area
Valuation
2025
£’000
Percentage
of portfolio
1 1 Van Lanschot
Kempen
Specialist independent wealth manager that provides
private banking, asset management and merchant
banking to wealthy individuals and institutions.
www.vanlanschot.nl
Netherlands 15,450 3.0
2 2 TKH Technology company specialising in the development
and delivery of systems and networks for the provision of
information, telecommunication, electrotechnical
engineering and industrial production.
www.tkhgroup.com
Netherlands 13,324 2.6
3 14 Alzchem
Developer and manufacturer of speciality chemicals.
www.alzchem.com
Germany 11,080 2.1
4 4
KSB
Manufacturer of specialised pumps and valves.
www.ksb.com
Germany 10,947 2.1
5 5 IG Group Global fintech company that delivers online trading
platforms.
www.ig.com
United
Kingdom
10,605 2.1
6 32 R&S Group Manufacturer and supplier of electrical infrastructure
equipment.
the-rsgroup.com
Switzerland 10,573 2.0
7 3 SUESS
MicroTec
Leading supplier of equipment and process solutions for
the semiconductor industry.
www.suss.com
Germany 9,427 1.8
8 16 Gaztransport
et Technigaz
Engineering company specialising in the cryogenic
membrane containment systems used for the transport
and storage of liquefied gas, particularly Liquefied
Natural Gas.
www.gtt.fr
France 8,428 1.6
9 6 Stroeer Provider of out-of-home advertising, online advertising,
billboards and street furniture.
www.stroeer.de
Germany 7,598 1.5
10 77 Elmos
Semiconductor
Developer and manufacturer of microelectronic
components and system components.
www.elmos.com
Germany 6,984 1.4
104,416 20.2
Geographic exposure
2025
%
2024
%
Germany 23.2 20.2
Sweden 13.9 10.9
France 11.2 12.7
Netherlands 9.7 11.9
Switzerland 9.1 8.2
Spain 8.7 4.9
Greece 3.7 3.1
Norway 3.4 2.9
2025
%
2024
%
Belgium 3.4 5.0
Italy 3.2 5.3
United Kingdom 2.4 1.7
Portugal 2.1 2.4
Denmark 2.0 4.0
Austria 1.8 1.6
Finland 1.5 1.7
Ireland 0.7 2.2
2
0
2
4
2
0
2
5
Sector exposure
2025
%
2024
%
2
0
2
4
2
0
2
5
Industrials 32.8 36.3
Consumer Discretionary 19.9 17.1
Technology 15.1 13.3
Financials 13.4 13.6
Basic Materials 6.1 5.0
Health Care 4.6 3.1
Real Estate 4.2 3.7
Energy 2.9 2.0
Consumer Staples 0.6 3.4
Utilities 0.4 2.0
Telecommuniations – 0.5
The European Smaller Companies Trust PLC Annual Report 2025
11
1 NAV total return per ordinary share
2 MSCI Europe ex UK Small Cap Index
3 AIC European Smaller Companies sector
4 Share price total return using closing price
5 The NAV per share, NAV total return, share price total return, discount and ongoing charge are Alternative Performance Measures. More information on these can
be found on pages 81 and 82
6 Average share price for the AIC European Smaller Companies sector
7 Excludes the performance fee where payable
8 Figures for 2016 to 2021 are restated to take account of the 8:1 share split completed on 13 December 2021
9 Net assets post completion of the 42.5% tender offer which concluded on 27 June 2025
Sources:Morningstar Direct, Janus Henderson Investors
Total return performance to 30 June 2025
(including dividends reinvested and excluding transaction costs)
1 year
%
3 years
%
5 years
%
10 years
%
NAV
1, 5
14.5 49.4 92.8 226.2
Benchmark
2
14.0 38.0 56.0 160.8
Average sector NAV
3
16.8 40.0 59.0 187.4
Share price
4, 5
21.9 65.6 128.7 242.4
Average sector share price
3, 6
22.7 50.1 75.0 189.5
Total return performance compared to the benchmark
(assumes the investment of £100 and reinvestment of all dividends)
50
100
150
200
250
300
350
2018 2019201720162015 2024 2025 2023 2022 2021 2020
Share Price
4, 5
NAV
1, 5
Benchmark
2
£
Financial information
At
30June
Net assets
£’000
NAV per
ordinary
share
8
p
Closing
price per
ordinary
share
8
p
Discount
5
%
Profit/(loss)
for year
£’000
Revenue
return
8
p
Capital
return
8
p
Tota l
return
8
p
Tota l
dividend
8
p
Ongoing
charge
5, 7
(AIC
formula)
%
2016 377,683 94.46 77.50 18.0 44,782 1.69 9.51 11.20 1.44 0.79
2017 569,459 143.19 133.88 6.5 199,540 2.14 47.96 50.10 1.81 0.75
2018 574,591 143.34 127.50 11.0 9,936 2.76 (0.27) 2.49 2.38 0.71
2019 521,023 129.98 111.50 14.2 (42,795) 3.01 (13.69) (10.68) 2.75 0.72
2020 523,374 130.56 105.50 19.2 13,525 1.49 1.88 3.37 2.76 0.73
2021 840,667 209.71 185.63 11.5 328,517 2.59 79.36 81.95 3.13 0.71
2022 652,464 162.76 140.00 14.0 (174,712) 5.16 (48.75) (43.59) 4.35 0.65
2023 738,642 184.26 154.00 16.4 104,381 5.22 20.82 26.04 4.70 0.65
2024 798,594 201.01 178.40 11.2 84,898 5.41 15.81 21.22 4.80 0.67
2025
9
510,677 224.45 211.50 5.8 90,057 4.24 19.78 24.02 4.90 0.68
Historical Information
12
The European Smaller Companies Trust PLC Annual Report 2025
Business model
Purpose
Our purpose is to deliver a long-term sustainable return to
shareholders from investing in smaller and medium sized
European companies.
Strategy
Our strategy is to offer investors a cost effective investment
proposition which provides access to a professionally and
actively managed portfolio of investments.
The Company is an investment trust which is a pooled
investment vehicle, allowing exposure to a diversified range
ofassets through a single investment, thus spreading the
investment risk. All services are delivered by reputable
third-party service providers whose performance is overseen
by a Board of Directors (the ‘Board’). The Board is comprised
entirely of non-executive directors accountable to shareholders,
who can remove a director from office where they deem it
tobe in the interests of the Company. The non-executive
directors are independent of the investment manager.
The significant advantages of our business model are its
closed-end nature, which enables the Fund Manager to
remain fully invested, and the ability to use leverage to
increase returns for shareholders.
Values and culture
We aim to be viewed by our shareholders as a sound long-
term investment. Alongside delivering attractive returns, we
believe our shareholders would expect us to act professionally
and with integrity, and to treat their investment with the same
care we would our own. Accordingly, we bring these values to
our deliberations as a Board and seek to build long-term
relationships with like-minded and reputable service
providers. In particular, we apply this approach to our
investment manager as we regard them as our primary
partner in fulfilling our purpose.
Promoting the Company’s success
We seek to create long-term sustainable returns by following
four simple steps:
Buy the right assets: The fund management team maintain
adiversified portfolio with strong valuation disciplines.
Theportfolio comprises investee companies from across
thecorporate lifecycle, with a mix of early stage growth
businesses, sensibly priced quality growth stocks, companies
with mature revenue streams and self-help turnaround stories.
Using the right team: The Company outsources its operations
to third-party service providers. The Board engages high-
calibre, reputable service providers with established track
records to deliver the day-to-day operations. Their level of
service is monitored on an ongoing basis and their continued
appointment formally evaluated at least once a year.
With the right approach: The Company is a closed-end
investment vehicle, approved by HMRC as an investment trust
under theCorporation Tax Act 2010. By adopting a closed-
end structure, we allow the fund management team to take
along-term view when making investments, they can remain
fully invested as there are no redemptions to meet and they
have the ability to use leverage to increase returns for
shareholders. This approach provides a cost-effective
mechanism for delivering operations whilst allowing the
Company to take advantage of the capital gains treatment
afforded to approved investment trusts.
Investment objective
The Company seeks capital growth by investing in smaller
and medium sized companies which are quoted,
domiciled, listed or have operations in Europe (ex UK).
Investment policy
The following investment ranges apply:
Equities: 80% – 100%
Fixed Income and Cash: 0% – 20%
Smaller and medium sized companies are defined as those
whose market capitalisation is equal to or below the largest
member of the MSCI Europe ex UK Small Cap Index at the
time of investing.
Investments may include shares, securities and related
financial instruments, including derivatives. Unquoted
investments are permitted with prior Board approval.
The Company maintains a diversified portfolio. The
Company will not invest more than 7% of its total assets,
calculated as at the time of investment, in any one holding.
The Company can, but normally does not, invest up to 15%
of its gross assets in investment companies (including
listed investment trusts). The Company will not invest more
than 10% of its gross assets in companies that themselves
may invest more than 15% of their gross assets in UK listed
investment companies.
Derivatives
The Company may use financial instruments known
asderivatives for the purpose of efficient portfolio
management while maintaining a level of risk consistent
with the risk profile of the Company.
Gearing
Net gearing (defined as all borrowings less cash balances
andinvestments in cash funds) is limited by the Board to
amaximum of 30% of net asset value at the time of
investment.
With appropriate Board approval, the Company may, but
currently does not, hedge against currency movements.
The European Smaller Companies Trust PLC Annual Report 2025
13
Business model (continued)
Overseen with the right governance: The Company’s
operations are overseen by a Board of Directors. The Board is
accountable to the Company’s shareholders andare re-
elected by them annually. The directors are independent of
the investment manager and are selected based on their
business experience and personal attributes in order to bring
a balance of skills to the oversight of the Company’s
operations and to ensure thatthe investment manager is
appropriately challenged on their recommendations.
Engaging with stakeholders (s.172)
We, as directors, have the success of the Company foremost in our minds when making decisions. Decisions are taken with the
aim of achieving our purpose and are based on information provided by a range of sources. The impact on stakeholders is
assessed as part of our deliberations, although stakeholders may be affected differently.
The table below sets out the primary ways in which we, as your Board, engage with the Company’s key stakeholders.
Stakeholder Engagement
Shareholders and
potential investors
Purpose:
●
Keep investors updated on the Company’s performance.
●
Promote the Company to new shareholders.
How we engage:
●
Daily NAVs and monthly factsheets are published to keep shareholders up to date with the value of
theportfolio.
●
Meetings with the Fund Manager, members of his team and Board members are offered to
shareholders and potential shareholders to provide insight into the portfolio.
●
Information on the Company and video updates from the Fund Manager are made available on the website
and via social media channels with a view to keeping shareholders informed on the positioning of the portfolio.
●
The half-year report and annual report are published to keep shareholders informed on the Company’s
financial performance, its governance framework and any current issues.
●
Shareholders are encouraged to attend the annual general meeting where they have the opportunity to
meet Board members and the fund management team.
●
The Fund Manager provides a presentation to shareholders and analysts following publication of the
annual report with a view to providing insight on the Company’s performance.
●
The investment manager and corporate broker run a programme of engagement with wealth managers
and other professional investors.
●
The Board makes additional spend available to promote the Company’s investment proposition to retail
investors in the UK and holds an in-person annual general meeting enabling shareholders to attend and
speak to directors and the fund management team.
Outcome:
●
Shareholders are informed and there is regular demand for the Company’s shares.
Investment
manager
Purpose:
●
Maintain a close working relationship with the investment manager as this is key to achieving the
Company’s investment objective and promoting the Company to investors.
How we engage:
●
The fund management team are invited to each Board meeting to provide an update on the
performance of the portfolio and to keep the directors in touch with their view on the markets and
positioning of the portfolio.
●
The investment manager provides data on the key performance indicators at each meeting enabling the
directors to measure performance.
●
The investment manager demonstrates compliance with the parameters of the investment mandate at
each meeting and provides access to senior managers in the Operational Risk and Internal Audit teams
enabling the directors to assess the effectiveness of internal controls in operation.
●
The heads of the investment trusts Sales and Marketing teams are invited to provide regular
presentations to the Board on how the Company is promoted to professional and retail investors.
Outcome:
●
The Board is confident that the Company’s assets are well managed and managed in line with the
investment objective, and within the parameters established by the Board.
●
The Board has a good understanding of how the Company is perceived in the market and whether
theinvestment objective remains relevant in the prevailing market conditions.
The European Smaller Companies Trust PLC Annual Report 2025
14
Business model (continued)
Stakeholder Engagement
Service providers
●
Corporate
broker
●
Custodian
●
Depositary
●
Fund
administrator
●
Registrar
Purpose:
●
The Company’s day-to-day operations run smoothly.
●
The directors are aware of any issues which may arise and can ensure that suitable action is taken to
address them.
How we engage:
●
The Board receives regular reporting and presentations from its key third-party service providers
throughout the year.
●
Designated staff at the investment manager engage regularly with all third-party service providers
through meetings and written reporting, and keep the Board updated with any areas of concern.
●
The Management Engagement Committee annually reviews the level of services delivered by each
service provider and the terms on which they are engaged to ensure that these remain in line with
market practice.
Outcome:
●
The Board is confident in its selection of third-party service providers and maintains good oversight of
the Company’s operations.
Investee
companies and the
environment
Purpose:
●
The Board has an understanding of the Fund Manager’s approach to incorporating environmental,
social and governance matters in stock selection.
How we engage:
●
The fund management team has regular engagement with the management teams of investee
companies enabling them to assess performance and governance arrangements.
●
The shares held in the Company’s portfolio are voted at general meetings and appropriate engagement
undertaken with investee companies where management proposals are not supported.
Outcome:
●
The Company is a responsible investor.
Board decision making
The Board is mindful of acting in the best interests of
shareholders as a whole and has regard to other stakeholders
in making its decisions. The Board takes into consideration
the Company’s purpose, investment objective and policy as
well as the interests of the Company’s stakeholders when
discussing matters and making decisions. In addition to
regular, detailed discussions about the Company’s investment
portfolio, strategy and performance, the following are
examples of discussions held and decisions made by the
Board during the financial year ended 30 June 2025.
Response to requisition
One of the Company’s shareholders, Saba Capital
Management, L.P. (‘Saba’) requisitioned a general meeting on
18 December 2024 proposing that the incumbent directors be
replaced with nominees of their choosing. The Board, with its
advisers, spent a significant amount of time formulating a
response to the requisition and ensuring that all shareholders
were aware of the impact that the proposed changes were
likely to have on their investment. This was an intensive
process during which the directors made decisions regarding
a suitable response to Saba, engaging with the UK regulator
and share dealing platforms as well as the press to ensure all
shareholders could be reached. This activity was delivered
over a seven-week period and resulted in the resounding
defeat of all resolutions proposed by Saba.
Tender offer
Having received a very clear mandate from shareholders at
the requisitioned general meeting regarding the continuation
of the Company in its current form, the Board considered
several possible options which would facilitate an exit for
those shareholders no longer wishing to hold the Company’s
shares. With input from shareholders, the Board determined
that a 42.5% tender offer would allow those wishing to sell
their shares the opportunity todo so, while permitting those
wanting to maintain their exposure to European smaller
companies the ability to continue their investment. The tender
offer was a notable achievement, offering in specie and cash
exit options. Thetender successfully closed on 27 June 2025,
with the ongoing pool of assets free to continue delivering
theCompany’s investment objective.
Combination with European Assets Trust PLC
When EAT invited proposals from other investment managers,
the Board played a role in formulating and agreeing the
Company’s final submission and the Chairman joined the fund
management team in presenting their investment opportunity
The European Smaller Companies Trust PLC Annual Report 2025
15
Business model (continued)
to the EAT Board. The directors contributed to decision
making on the structure of the combination, approved the
documentation necessary to effect the transaction and
agreed the communications to be sent to shareholders.
Fee arrangements
The Company is an Alternative Investment Fund and has
appointed Janus Henderson Fund Management UK Limited
(‘JHFM’) to act as its Alternative Investment Fund Manager
(‘AIFM’). JHFM delegates investment management services
toJanus Henderson Investors UK Limited. Both entities are
authorised and regulated by the Financial Conduct Authority
(‘FCA’) and are part of the Janus Henderson group of
companies. References to ‘Janus Henderson Investors’ or
‘JHI’ refer to the services provided to the Company by the
investment manager’s group.
The investment manager is engaged under the terms of an
agreement initially concluded in 2014 and most recently
updated in 2024. The agreement is terminable on six months’
notice. The fund management team is led by Ollie Beckett,
who has been in place since 1 July 2011.
The base management fee is 0.55% per annum of net assets
up to £800m and 0.45% per annum thereafter. Following
successful completion of the combination with EAT, the fee for
the first tier reduced to0.50% per annum on net assets upto
£800m. As part of the combination, JHFM will make a
contribution to the costs in the amount equal to nine months
of the new management fee that would otherwise be payable
on the value of the rollover pool at the calculation date. This
amount will be reduced with a prescribed formula in light of
any shares repurchased from the CT Savings Plans. JHFM
may elect to settle this contribution by way of offset against
the management fees payable under the management
agreement. Fees are charged quarterly inarrears.
Theinvestment manager may also be eligible to receive a
performance related fee. Performance is measured against,
and expressed relative to, the benchmark, being the MSCI
Europe ex UK Small Cap Index.
Performance of the Company and the benchmark is
measured on a NAV total return (with gross income reinvested)
basis and is measured over a rolling three-year period. In any
given year in which a performance fee is payable, the rate is
15% of the positive difference between the average annual
NAV total return and the average annual total return of the
benchmark. The upper limit on the total fee, including the
base fee and any performance fee, for any given accounting
year is 2.0% of the NAV of the Company as at the last day of
the relevant calculation period. A performance hurdle over the
benchmark of 1.0% must be reached before any performance
fee can be earned and is excluded from the performance fee
itself should one be payable. Performance is measured solely
on the basis of NAV total return relative to the total return of
the benchmark index. No account is taken of whether the
NAV grows or shrinks in absolute terms.
The investment manager, and its subsidiaries, provide
accounting, company secretarial, sales, marketing and
general administrative services to the Company. Some of
theadministrative and accounting services are carried out,
onbehalf of the investment manager, by BNP Paribas.
Corporate Secretary
The Corporate Secretary, Janus Henderson Secretarial
Services UK Limited, is a subsidiary of Janus Henderson
Investors withits own reporting lines and audited internal
controls. There are processes and controls in place to ensure
that thereis a clear distinction between the Corporate
Secretary and JHI, particularly when dealing with any conflicts
or issues between the Company and JHI. Correspondence
from shareholders addressed tothe Chairman or the Board
received at theinvestment manager’s offices is forwarded to
theChairman,or addressee, in line with the established
procedures in place.
The European Smaller Companies Trust PLC Annual Report 2025
16
Principal and emerging risks
Investing, by its nature, carries inherent risk. The Board, with the assistance of the investment manager, carries out a robust
assessment of the principal and emerging risks and uncertainties facing the Company which could threaten the business model
and future performance, solvency and liquidity of the portfolio. A matrix of these risks, along with the steps taken to mitigate
them, is maintained and kept under regular review. The mitigating measures include a schedule of investment limits and
restrictions within which the fund management team must operate.
Alongside the principal risks, the Board considers emerging risks, which are defined as potential trends, sudden events or
changing risks which are characterised by a high degree of uncertainty in terms of the probability of them happening and the
possible effects on the Company. Should an emerging risk become sufficiently clear, it may be classified as a principal risk.
During the year under review, the Board did not identify any emerging risks which were not already encompassed within the
existing principal risks. The assessment included consideration of the possibility of severe market disruption.
The principal risks which have been identified and the steps taken to mitigate these are set out below. The Board does not
believe these principal risks to have changed over the course of the year.
Principal risk Mitigating measures
Investment strategy and objective
The investment objective or policy is not
appropriate in the prevailing market or sought by
investors, leading to a wide discount and hostile
shareholders.
Investment mandate limits established by the
Board are inappropriate leading to out-of-scope
investments which may negatively impact
shareholder value.
Poor investment performance over an extended
period leading to shareholders voting to wind up
the Company. This may be the result of:
●
external factors such as geopolitical
instability, including financial shock,
pandemic, climate change, changes in the
regulatory environment, etc.
●
internal factors such as poor stock selection,
poor management of gearing, loss of key
members of the fund management team, etc.
The investment manager periodically reviews the investment objective and
policy in line with best practice and taking account of investor appetites.
TheBoard receives regular updates on professional and retail investor activity
from the investment manager, and reports from the corporate broker, both of
whom remain in contact with professional investors throughout the year, to
inform themselves of investor sentiment and how the Company is perceived
in the market. From time to time, research may be undertaken by a third-
party consultant to specifically ascertain the views of retail investors. Thelevel
of discount and the share register are reviewed by the Board at each meeting.
The Board reviews compliance with the investment limits at each meeting.
The Fund Manager maintains a diverse portfolio (sector, country, corporate
lifecycle) with buy/sell disciplines and employs suitable quantitative and
qualitative metrics, which incorporates environmental, social and governance
(‘ESG’) considerations, for assessing stocks for inclusion in the portfolio.
TheBoard reviews the Key Performance Indicators (‘KPI’s), portfolio
composition and levels of gearing at each meeting. TheBoard furthermore
maintains an understanding of the fund management team’s investment
process and considers the potential for climate change to impact the value
ofthe portfolio, alongside other factors which may have a similar effect.
Operational
Failure of, disruption to or inadequate service
levels provided byprincipal third-party service
providers leading to loss of shareholder value or
reputational damage.
Inadequate cyber security arrangements at the
Company’s third-party service providers leading to
data being compromised or lost, and shareholder
value impacted.
The Board engages reputable third-party service providers and formally
evaluates their performance, and terms of engagement, at least annually.
The Audit Committee receives annual reporting from the Chief Information
Security Officer at the investment manager and assesses the internal controls
over information technology at the Company’s third-party service providers
as part of their ongoing assurance reporting.
Legal and regulatory
Loss of investment trust status, breach of the
Companies Act 2006, Listing Rules, Prospectus
Regulation and/or Disclosure Guidance
andTransparency Rules or the Alternative Fund
Managers Directive and/or legal action brought
against the Company and/or directors and/or the
investment manager leading to a decrease in
shareholdervalue and reputational damage.
The Board reviews the investment limits at each meeting which include
compliance with provisions set out in the Corporation Tax Act 2010.
The investment manager provides investment, company secretarial,
administration and accounting services through qualified professionals to
ensure the Company’s legal and regulatory obligations are fulfilled.
The Audit Committee assesses the effectiveness of internal controls in place
at the Company’s third-party service providers through review of their ISAE
3402 reports.
Managing risks and our viability
The European Smaller Companies Trust PLC Annual Report 2025
17
Managing risks and our viability (continued)
Principal risk Mitigating measures
Financial
Market, liquidity and/or credit risk, inappropriate
valuation ofassets or poor capital management
leading to a loss of shareholder value.
The Board determines the investment limits and monitors compliance with
these at each meeting. The directors review the portfolio liquidity at each
meeting and periodically consider the appropriateness of hedging the portfolio
against currency risk.
The Board reviews the revenue statement, balance sheet and portfolio
valuation at each meeting. Holdings in the portfolio are valued in line with
accounting policies.
Investment transactions are carried out by a large number of approved
brokers whose credit standard is periodically reviewed and limits are set on
the amount that may be due from any one broker. Cash is only held with the
custodian or reputable banks.
The Board monitors the broad structure of the Company’s capital including
the need to buy back or allot ordinary shares and the extent to which revenue
in excess of that which is required to be distributed, should be retained.
Going concern and viability
In keeping with provisions of the Code of Corporate
Governance issued by the Association of Investment
Companies (the ‘AIC Code’), the Board has assessed the
prospects of the Company for a period of at least twelve
months from the date of this report, being 20 October 2026
(our assessment of going concern) and also over the longer
period of three years (our assessment of viability).
We consider the Company’s viability over a three-year period as
we believe this is a reasonable timeframe reflecting the longer
term investment horizon for the portfolio, but acknowledges the
inherent shorter term uncertainties inequity markets.
As part of the assessment, we have considered the
Company’s financial position, as well as its ability to liquidate
the portfolio and meet expenses as they fall due. The following
aspects formed part of our assessment:
●
the closed-end nature of the Company which does not
need to account for redemptions;
●
an assessment of the principal and emerging risks, as well
as the uncertainties facing the Company, including the
potential impact of climate change on the value of
investeecompanies;
●
the diverse nature of the portfolio and its anticipated
liquidity in normal and stressed market conditions;
●
the level of the Company’s revenue reserves and the size
of the bank overdraft facility; and
●
the expenses incurred by the Company, which are
predictable and modest in comparison with the assets
and the fact that there are no capital commitments
currently foreseen which would alter that position.
Also of relevance in contemplating the duration of the
Company, is the three-year cycle for its continuation vote.
Shareholders were last asked at the annual general meeting
in2022 if they wished the Company to continue in operation.
The resolution was passed with the overwhelming support of
84.4% shareholders who voted. The next continuation vote
will be put to shareholders at the forthcoming annual general
meeting on 24 November 2025. Based on the voting record
since 2000 for such resolutions and the recent tender offer
which facilitated an exit for all shareholders not wishing to
continue their investment in the Company, the Board is
confident that shareholders will continue to support the
Company. In the event this is not the case, the directors are
required under thearticles to put forward proposals for the
liquidation or reconstruction of the Company.
As well as considering the principal risks and financial position
of the Company, along with the continuation vote, the Board
has made the following assumptions:
●
investors will continue to wish to have exposure to investing
in European small cap companies;
●
investors will continue to invest in closed-end funds;
●
the Company’s performance will continue to be
satisfactory; and
●
the Company will continue to have access to adequate
capital when required.
Based on the results of the assessment, we have concluded
that:
●
the Company has adequate resources to meets its
liabilities for a period of at least twelve months from the
date of this report, being 20 October 2026, meaning it is
therefore appropriate to prepare these financial statements
on a going concern basis; and
●
we have a reasonable expectation that the Company will
be able to continue operations over the coming three-year
period, as well as meeting its expenses and liabilities for
that period.
The European Smaller Companies Trust PLC Annual Report 2025
18
Responsible investment
We aim to make well-informed investment decisions which deliver the returns that our shareholders expect, but not at the
expense of the environment or wellbeing of society. We believe that investing in well-managed, sustainable businesses is the
foundation for achieving good returns. The closed-end nature of the Company makes it ideal for long-term investing and our
focus on small, developing companies provides our fund management team with the opportunity to meaningfully engage with
investee companies as they grow and develop their strategies.
Investment process
The fund management team employ a bottom-up stock selection approach in constructing the portfolio and continuously
monitor the performance of and risks associated with each holding. The approach is designed to deliver the capital growth set
out in the investment objective.
The process involves screening potential investment opportunities, meeting with management teams to understand their
businesses and supplementing this with internal and external research. Understanding the business, the threats to its success,
its competitive position and quality of the management team in the context of the valuation of the company are key to
determining whether an investment is made and also the size of the investment.
Overview of the investment process
Proactive idea
generation
Valuation is
key
Risk
management
Understand
the business
Screening
Across the company
life cycle…
Question ourselves
HOLT quantitative
challenge
Meeting
Management
External
Research
Internal
Research
Seek mispriced
securities
Monitoring and
sell discipline
Source: Janus Henderson Investors
The Company does not pursue an environmental, social or
governance (‘ESG’) strategy, but the fund management team
integrates ESG elements into the investment process on all
bottom-up stock decisions when material to the investment
case. ESG metrics are applied in a non-binding manner.
Thefund management team’s view is that companies scoring
well on ESG and sustainability will warrant a valuation
premium over time and they seek to determine what a fair
premium for those assets should be and invest when stock
can be bought at an attractive price. Negative screening isnot
employed, but instead the fund management team looks to
find companies that can improve.
Defining ESG:
●
Environmental factors include climate change, energy
efficiency, resource depletion, water and waste
management.
●
Social factors include employee and community relations,
diversity, quality of life, enhancements in knowledge and
advances in supportive technology for improved
sustainability.
●
Governance factors include mitigating risks such as
bribery and corruption, questioning board diversity,
executive pay, accounting standards and shareholder
rights, and positively influencing corporate behaviour.
The European Smaller Companies Trust PLC Annual Report 2025
19
Responsible investment (continued)
An assessment of ESG considerations is made for each stock
during the research process when deemed material. The
focus on the analysis is based on the rate of change rather
than existing scores. It is therefore crucial to understand what
procedures and initiatives a company is putting in place to
improve ESG practices.
In terms of governance, the fund management team
specifically considers the track record and execution ability of
management, as well as their attitudes towards public market
investors and the allocation of capital. The governance and
incentive structures which management operate are key
elements in corporate value creation. This can be particularly
important when looking at turnaround situations where
management teams are often new to the business and their
actions are integral to the investment thesis.
Constructive and respectful attitudes to public market
shareholders and the protection of minority interests are also
very important. The responsiveness of a company towards
shareholder concerns is a crucial signal about the ability to
unlock value and distribute it to all of a company’s owners.
Beyond the governance arrangements, our fund management
team’s research looks at several other sources of quantitative
and qualitative information. Environmental and social factors
are an important part of that in combination with fundamental
research into the cash generative potential of a business.
Increasingly environmental and social factors are proving to
be pivotal to the emergence of structural themes, such as
electromobility or renewable energy, making them too
important to ignore.
ESG investment process
Environmental damage
Energy sourcing
Carbon intensity
Sustainability targets
Environmental
Social
Workplace standards
Scandals
Diversity
Societal needs
Governance
Shareholder alignment
Management reputation
Disclosures
Capital allocation
Do we trust them?
Earnings quality
Approximately 600 company
meetings per annum
Led by investment team and
/or /with Governance and Responsible
Investment team
Focus on direction of travel
Informs voting decisions
Presents investment
opportunities and
risks
Position sizing
Informs buy/sell
decisions
Third party feedback
We will hold a low
scoring stock if we
believe it will
improve*
Portfolio implicationsEngagements
Core assumptions ESG Analysis: What we look for
Data integrity is
poor, therefore
engagement is key
Focus on financial
materiality
1
2
Insights
Insights
Source: Janus Henderson Investors
Headline ratings from external providers may be a useful
starting point, but do not offer a complete picture on a
standalone basis. They are often backward looking with data
integrity issues for smaller companies. External providers
face significant difficulties in aligning subjective topics
contained within the ESG arena with attempts at an objective
scoring system used to compare stocks. As a result, there is
often a high level of dispersion in ratings depending on the
agency. Furthermore, certain issues within ESG can be in
conflict, for instance many European smaller companies
have excellent environmental and social benefits, which are
balanced by governance concerns through issues such as
high levels of family ownership. These, along with other
factors, drive the fund management team’s focus upon
improvements in ESG practices and disclosures, in addition
to the existing status.
*Usually based on MSCI ESG Ratings
The European Smaller Companies Trust PLC Annual Report 2025
20
Responsible investment (continued)
Engagement with investee company
Reason for engagement: The fund management team
met with the management of this investee company
following a new MSCI ESG rating of CCC.
What did we do? The fund management team spoke to
management regarding their plans to increase the number
of independent directors and improve board diversity.
Currently only one of five directors is considered by MSCI
to be independent and only one is female. Although no
changes to the composition of the Board are anticipated at
the next annual general meeting, the fund management
team provided feedback that they expected to see greater
independence and diversity over time.
Remuneration disclosures remained limited with no targets
or weightings included, although some financial information
was disclosed. The company’s management indicated that
disclosures in the next annual report would be improved.
Environmental and social disclosures were also minimal.
The company’s management indicated that enhanced
non-financial reporting would be included in the report in
2026 following the introduction of metrics and targets.
Theyfurther confirmed additional data regarding
employees would be disclosed in due course.
Outcome and next steps: The fund management team
provided feedback throughout the meeting that they
would like to see improvements in the areas discussed.
Given that the company had only recently begun
reporting publicly, it was acknowledged that this would
take time to achieve. The fund management team were
assured that appropriate steps were being take to
improve the company’s environmental and social policies
and disclosures. The investment manager’s Responsible
Investment and Governance team and the fund
management team would continue to monitor the
company’s corporate governance practices as they
developed over time.
Voting
We believe that voting at general meetings is an important
aspect of corporate stewardship and a means of signalling
shareholder views on board policy, practices and
performance. We have tasked our investment manager with
considering how best to vote the rights attached to the shares
in the Company’s portfolio. This enables us to utilise the
expertise of their Governance and Responsible Investment
team in assessing engagement by investee companies and
the appropriateness of any resolutions which shareholders
may be asked to approve.
The Board retains oversight of the process by receiving
reporting at each meeting indicating how the Company’s
shares have been voted and where support for management
recommendations has not been warranted, and by reviewing
our investment manager’s Responsible Investment Policy and
Proxy Voting Policy and Procedures at least annually.
Voting decisions are guided by the best interests of the
investee companies’ shareholders and made in consultation
with the fund management team, who have an in-depth
understanding of the respective company’s operations.
Thefund management team believe in engaging with
management and boards to resolve issues of concern
ratherthan to vote against shareholder meeting proposals.
Thisapproach is more likely to be effective in influencing
company behaviour.
In the period under review, we voted at 98.7% of the general
meetings held by investee companies. The only proposals not
voted on are those which would have resulted in share-
blocking. This is where voting would have restricted the ability
to trade the shares in advance of the meeting.
At 60.3% of the meetings at which we voted, at least one vote
was cast against management recommendations.
Voting record
88.8% of resolutions were supported
11.0% of resolutions were not supported
0.2% of resolutions were abstained from
88.8%
0.2%
11.0%
Breakdown of resolutions not supported
Auditor related
Capital issuance or structure
Amend articles
Director compensation
Director related (other than compensation)
Other business*
9.1%
14.7%
3.4%
1.3%
34.8%
36.7%
Source: Janus Henderson Investors using Institutional Shareholder Services (ISS)
categories
* We routinely vote against proposals labelled ‘other business’. Although this
request allows the board and shareholders to raise other issues and discuss
them at the meeting, it may lead to subsequent approval of items without prior
disclosure to minority shareholders
The European Smaller Companies Trust PLC Annual Report 2025
21
Responsible investment (continued)
The environment
As an investment trust, the Company’s own direct
environmental impact is minimal. The Company has no
greenhouse gas emissions to report from its operations, nor
does it have responsibility for any other emissions producing
sources under the Companies Act 2006 (Strategic Report
and Directors’ Reports) Regulations 2013. For the same
reasons, the Company considers itself to be a low energy
user under the Streamlined Energy & Carbon Reporting
(‘SECR’) regulations and therefore is not required to disclose
energy and carbon information.
The investment manager recognises the importance of
managing its operational activities in a sustainable way and
minimising any adverse impact on the environment. In 2021
Janus Henderson Investors reached its three-year target to
reduce its carbon footprint by 15% per full-time employee
(‘FTE’) from 2018 levels. In 2022, using guidance from the
Science-Based Target Initiative, Janus Henderson Investors
set ambitious new five-year reduction targets versus a 2019
baseline and per FTE:
●
reduction target of 29.4% in Scope 1 (fuel) and Scope 2
(electricity) emissions;
●
reduction target of 17.5% in Scope 3 (business travel,
freight, paper, water, waste) emissions; and
●
reduction target of 17.5% on water and waste
consumption by FTEs.
JHI discloses its carbon emissions annually through regulatory
and voluntary reporting frameworks, including SECR, the
Carbon Disclosure Project.
Responsibility Report
JHI produces product-level Task Force on Climate-Related
Financial Disclosures (‘TCFD’) reports for funds in scope as
well as an entity-level TCFD report. These reports include an
overview of the climate-related governance, strategy, risk
management, and metrics and targets of JHI and its
portfolios. Product-level metrics include absolute carbon
emissions, carbon footprint, weighted average carbon
intensity, implied temperature rise and climate scenario
analysis (Climate Value at Risk).
JHI’s TCFD Report specific to the Company is available at
www.europeansmallercompaniestrust.com.
This Strategic Report, set out on pages 1 to 24, has been
approved by the Board.
On behalf of the Board
Daniel Burgess
Chairman of the Audit Committee
20 October 2025
The European Smaller Companies Trust PLC Annual Report 2025
22
Measuring our performance
In order to measure the success of the Company in meeting its investment objective and to evaluate the performance of the
Fund Manager, the directors take into account a number of Key Performance Indicators (‘KPIs’).
NAV and share price total return compared to the benchmark (rebased to 100)
1 year
£
Benchmark
2
Share Price
3, 7
NAV
1, 7
85
90
95
100
105
110
115
120
125
Jun
2024
Dec
2024
Apr
2025
Jun
2025
Aug
2024
Oct
2024
Feb
2025
Key Performance Indicators
NAV total return performance compared to the AIC and open end sectors (rebased to 100)
1 year
85
90
95
100
105
110
115
120
Jun
2024
Dec
2024
Apr
2025
Jun
2025
Aug
2024
Oct
2024
Feb
2025
£
NAV
1, 7
AIC sector
4
IA European Smaller Companies
5
EAA Fund Europe Small-Cap Equity
6
Benchmark
2
Discount
7
compared to the AIC sector average
1 year
Company AIC sector
4
-14
-12
-10
-8
-6
-4
-2
0
Jun
2024
Dec
2024
Apr
2025
Jun
2025
Aug
2024
Oct
2024
Feb
2025
%
1 NAV total return assumes all dividends are reinvested
2 MSCI Europe ex UK Small Cap Index
3 Share price total return using closing price
4 European Smaller Companies sector
5 Investment Association (‘IA’) sector
6 Morningstar category
7 NAV total return, share price total return and the discount are Alternative Performance
Measures. More information on these can be found on pages 81 and 82
The European Smaller Companies Trust PLC Annual Report 2025
23
Key Performance Indicators (continued)
Discount
7
compared to the AIC sector average
5 year
Company AIC sector
4
Jun
2020
Jun
2021
Jun
2022
Jun
2023
Jun
2024
Jun
2025
%
-20
-18
-16
-14
-12
-10
-8
-6
-4
NAV total return performance compared to the AIC and open end sectors (rebased to 100)
5 year
Jun
2020
Jun
2021
Jun
2022
Jun
2023
Jun
2024
Jun
2025
%
100
120
140
160
180
200
NAV
1, 7
AIC sector
4
IA European Smaller Companies
5
EAA Fund Europe Small-Cap Equity
6
Benchmark
2
NAV and share price total return compared to the benchmark (rebased to 100)
5 year
%
100
120
140
160
180
200
220
240
NAV
1, 7
Benchmark
2
Share price
3, 7
Jun
2020
Jun
2021
Jun
2022
Jun
2023
Jun
2024
Jun
2025
1 NAV total return assumes all dividends are reinvested
2 MSCI Europe ex UK Small Cap Index
3 Share price total return using closing price
4 European Smaller Companies sector
5 Investment Association (‘IA’) sector
6 Morningstar category
7 NAV total return, share price total return and the discount are Alternative Performance
Measures. More information on these can be found on pages 81 and 82
The European Smaller Companies Trust PLC Annual Report 2025
24
Wienerberger, 0.6% of the portfolio
Manufacturer of wall, roofing and landscaping materials
Governance
25
James Williams
Position:
Chairman of the Board and
Management Engagement Committee
Date of appointment:
1 November 2023
(as Chairman from 25 November 2024)
Career and background
James has over 30 years’ international
business experience, including nearly
20 years in the investment banking
industry, having held senior roles in Asia
and Europe at ING Barings, ABN AMRO
and Commerzbank. Following his
departure from Commerzbank, he
became a partner at Saginaw Capital
LLP until 2008.
Skills and expertise
James has many years’ international
business experience in Asia and
Europe, and a strong knowledge of
theinvestment trust sector and
financialmarkets.
External appointments
James is the non-executive Chairman
of Schroder AsiaPacific Fund plc, and a
non-executive director of Net Zero One
Limited and NT Asian Discovery Fund.
Daniel Burgess
Position:
Chairman of the Audit Committee
Date of appointment:
25 November 2019
Career and background
Dan was a partner at KPMG LLP for
twenty-three years. He initially led the
statutory audits of a number of large
public limited companies and public
interest entities before specialising in
due diligence and regulatory services
on mergers and acquisitions and capital
market transactions.
Skills and experience
He has significant accounting, auditing,
corporate governance and listed
companies experience.
External appointments
Dan is the Chairman of the Audit
Committee of JPMorgan Emerging
Europe, Middle East and Africa
Securities plc.
Ann Grevelius
Position:
Independent non-executive director
Date of appointment:
23 September 2019
Career and background
Ann has more than thirty years´
experience in the asset management
sector and has been active in the
venture capital industry as partner and
senior advisor at GP Bullhound, a
technology advisory and investment
firm. She has held positions as Chief
Investment Officer and Global Head of
Investment Strategy at SEB Wealth
Management and prior to that, Ann was
head of Swedish and Nordic Equities at
SEB Investment Management and
Handelsbanken Asset Management.
Skills and experience
Ann has extensive asset management
experience and her input gives greater
insight on market sentiment and
conditions in continental Europe.
External appointments
She is Chairman and co-founder of
Optise AB, a fintech start-up within
digital asset management and holds a
number of non-executive directorships
including OX2 AB, a renewable energy
company and Aktia Bank PLC, the
Finnish asset manager, bank and life
insurer. She is Chairman of the
Investment Committee at the Swedish
Foundation for Strategic Research.
Board of Directors
The right balance of skills and experience
Daniel Burgess Ann GreveliusJames Williams
The European Smaller Companies Trust PLC Annual Report 2025
26
Simona Heidempergher
Position:
Senior Independent Director (from
29July 2021) and Chairman of the
Nomination and Remuneration
Committee (from 27 July 2022)
Date of appointment:
1 September 2014
Career and background
Simona is a Managing Director of
Merifin Capital, a privately owned
European investment company with
offices in Europe, Asia and the USA,
which has successfully invested in
traditional and alternative asset
classes for more than 30 years.
Skills and experience
Simona has a wealth of asset
management experience and her
knowledge of European markets
provides useful context to the
investment background.
External appointments
She is a Managing Director of Merifin
Capital, chair of the board of directors
of the Stramongate Group, a
Luxembourg public company, and
adirector of Hansa Investment
Company Limited which is listed on
the London Stock Exchange.
Nadia Meier-Kirner
Position:
Independent non-executive director
Date of appointment:
28 April 2025
Career and background
Nadia has 20 years’ experience in
European mid-market private equity
with Triton Partners in Germany.
AtTriton she currently serves as the
Head of Strategic Investments and
prior to that held Sector Co-Head roles
in Business Services and Healthcare.
Nadia has considerable private board
expertise across the DACH region
(Germany, Austria and Switzerland),
andin Belgium and Sweden.
Skills and experience
Nadia has extensive investment
experience in European mid-market
private equity.
External appointments
Nadia is a non-executive director of
Franz Haniel & Cie GMBH, Swiss
ITSecurity Group AG and Siegwerk
Group Holding AK & Co KG.
Board of Directors (continued)
Simona Heidempergher Nadia Meier-Kirner
Welcome to our new directors
Stuart and Kate joined the Board following
completion of the combination with
European Assets Trust PLC.
Stuart Paterson
Position:
Independent non-executive director
Date of appointment:
15 October 2025
Career and background
Stuart is a co-founder and partner of
Scottish Equity Partners, one of Europe’s
leading technology growth equity investors.
Skills and experience
Stuart has over 25 years of equity investing
experience in European private companies.
He trained as an accountant with EY before
moving into equity investment.
External appointments
Since July 2019 Stuart has been a board
member of European Assets Trust PLC,
initially as Chair of Audit and from May
2024 as Chair, he is a Governor of The
Glasgow Academical War Memorial Trust
and is a Special Advisor to the growth
equity firm he co-founded, Scottish Equity
Partners LLP.
Kate Cornish-Bowden
Position:
Independent non-executive director
Date of appointment:
15 October 2025
Career and background
Kate is an experienced non-executive
director and a former fund manager for
Morgan Stanley.
Skills and experience
Kate worked as a fund manager for 12
years at Morgan Stanley Investment
Management, where she was managing
director and head of the global equity
team. Prior to Morgan Stanley she worked
as a research analyst at M&G.
External appointments
Kate is the Chair of International
Biotechnology Trust plc, a non-executive
director of Finsbury Growth & Income Trust
plc and a non-executive director and Chair
of the Audit Committee of CC Japan
Income & Growth Trust plc.
The European Smaller Companies Trust PLC Annual Report 2025
27
Governance codes
The Board is pleased to report to shareholders on how
theCompany has applied the principles of the Code of
Corporate Governance published by the Association of
Investment Companies.
By virtue of the Company’s listing on the London Stock
Exchange, the Board is required to report on how the
principles of the UK Corporate Governance Code (the
‘UKCode’) have been applied. Being an investment company,
a number of the provisions of the UK Code are not applicable
as the Company has no executive directors or internal
operations. Consequently, the Board considers the principles
and recommendations of the Code of Corporate Governance
published by the Association of Investment Companies (the
‘AIC Code’). The AIC Code addresses the principles set out
inthe UK Code as well as additional recommendations on
issues that are of specific relevance to investment companies.
The Company has reported against provisions of the AIC
Code published in 2019, which the Financial Reporting
Council has endorsed. A new UK Code was published in
January 2024, with an updated AIC Code published in August
2024. The new Codes will be applicable to financial years
beginning on or after 1 January 2025.
Copies of the AIC Code and the UK Code can be found on
the respective organisations’ websites: www.theaic.co.uk
and www.frc.org.uk.
Statement of compliance
The Board has considered the principles of the AIC Code
andconfirms that it has complied with these throughout the
reporting period.
The Company has no executive directors so does not
consider executive remuneration. As a fully managed
investment company, the Company has no internal operations
so does notmaintain an internal audit function, although the
Audit Committee regularly considers the need for it.
Overview
The Board is comprised entirely of non-executive directors
and has constituted three principal committees: the Audit
Committee, the Management Engagement Committee and
the Nomination and Remuneration Committee. The Board has
also constituted an Insider Committee which meets when
required to assist the Board in discharging its responsibilities
under the Market Abuse Regulations.
The terms of reference for each Committee are kept under
regular review by the Board and are available on the Company’s
website www.europeansmallercompaniestrust.com.
The Board engages third-party service providers to deliver
theoperations of the Company. Janus Henderson Investors
has been appointed to manage the investment portfolio and is
the Company’s Alternative Investment Fund Manager.
Theinvestment manager also provides the day-to-day
accounting, company secretarial, administrative, sales and
marketing activities. TheCompany has appointed a
depositary, which in turn appoints the custodian and is
responsible for the safe custody of the Company’s assets.
The Company has appointed a registrar to maintain the
Register of Members andassist shareholders with queries
inrespect of their holdings. The Company entered into each
of these principal engagements after full and proper
consideration of the quality and cost of the services offered,
including the operation of their internal control environments.
The Board and its committees maintain oversight of third-
party service providers through regular and ad hoc reporting,
as well as ongoing monitoring by the investment manager.
Board leadership and purpose
The Board is responsible for providing leadership and setting
the tone from the top in terms of the Company’s culture and
values. The Board appoints all third-party service providers
and monitors their performance throughout the year. The
directors formally evaluate the quality of the service provided
by each third-party service provider and consider the
appropriateness of the terms of their engagement at least
annually. The Board aligns the Company’s risk appetite
withthe investment objective set by shareholders and
establishes investment restrictions accordingly. The Board
keeps under regular review the risks faced by the Company
and assesses the effectiveness of internal controls put in
place to mitigate these.
As well as making the strategic decisions regarding the
Company’s objectives and establishing and monitoring the
risk management framework, the Board’s purpose is to
provide independent oversight of the operations delivered by
the Company’s third-party service providers and to challenge
the decisions and recommendations made by them,
particularly the investment manager.
The Board does this by meeting formally at least five times a
year, with additional Board or committee meetings arranged
when required. The directors have regular contact with the
Fund Manager and other employees of the investment
manager in connection with the delivery of company
secretarial, sales, marketing and other administrative services.
The Board has a formal schedule of matters specifically
reserved for its decision, which includes setting strategy and
providing oversight of performance against agreed measures.
It approves any changes to the structure and capital
arrangements for the Company, has oversight of financial
reporting and assesses the effectiveness of the internal
control framework. The Board approves communications with
shareholders, the appointment of new directors and oversees
corporate governance matters.
Corporate Governance Report
The European Smaller Companies Trust PLC Annual Report 2025
28
Each meeting follows an agenda agreed with the Chairman
and includes a review of the Company’s investment
performance, financial position, compliance with the
investment parameters and a review of notable changes to the
share register, along with any sales and marketing activities
undertaken. This reporting enables the Board to ensure that
control is maintained over the Company’s affairs.
The investment manager ensures that the directors receive
relevant management, regulatory and financial information.
Employees of the investment manager attend each Board
meeting enabling the directors to probe further on matters
ofconcern.
The Chairman is able to attend meetings of all the chairmen
oftheinvestment companies managed by JHI which provides
a forum to discuss industry matters.
The directors have access to the advice and services of the
Corporate Secretary through its designated representative
who is responsible for ensuring that Board and committee
procedures are followed. The proceedings of all Board and
committee meetings are minuted, with any particular
concerns raised by the directors appropriately recorded.
TheBoard and the investment manager operate ina
supportive, co-operative and open environment.
The Company has a procedure for directors to take
independent professional advice at the expense of the
Company in the furtherance of their duties. In order to enable
them to discharge their responsibilities, all directors have
fulland timely access to relevant information.
Division of responsibilities
Role Primary responsibilities
Shareholders/
investors
The Company’s shareholders are responsible for:
●
approving the Company’s investment objective and policy;
●
making decisions regarding changes to the Company’s constitution;
●
electing and re-electing directors to the Board, or removing them from office if deemed appropriate;
and
●
determining the overall limit for directors’ remuneration.
Chairman The Chairman of the Board is responsible for:
●
leading and managing Board business and ensuring the timely flow of information from service
providers to the Board. He facilitates open, honest and constructive debate among directors;
●
leading the Board in developing succession planning;
●
leading the Board in determining its governance framework, culture and values;
●
representing the Company, alongside the Fund Manager, externally at business, and community
level; and
●
managing the relationship with the investment manager.
Senior Independent
Director
The senior independent director:
●
acts as a sounding board to the Chairman;
●
serves as an intermediary for the other directors and shareholders; and
●
is responsible for leading the performance evaluation of the Chairman.
Independent non-
executive directors
The independent non-executive directors are responsible for:
●
providing constructive and effective challenge, especially to the decisions of the investment
manager;
●
scrutinising and holding to account the performance of the
– fund management team in meeting the investment objective;
– investment manager in the promotion of the Company and day-to-day smooth operations of the
Company’s business; and
●
providing strategic guidance and offering specialist advice.
Corporate Governance Report (continued)
The European Smaller Companies Trust PLC Annual Report 2025
29
Role Primary responsibilities
Committee chairs The Committee chairs are responsible for:
●
the leadership and governance of their committee;
●
maintaining the relationships with specialist service providers delivering services within the remit of
their committees;
●
reporting on the activities of their committee to the Board; and
●
seeking approval from the Board for the responsibilities set out in their respective terms of reference.
Investment manager The investment manager is the Company’s appointed Alternative Investment Fund Manager and is
responsible for:
●
promoting the Company’s investment proposition to professional and retail investors;
●
making the necessary reporting to the FCA regarding the Company’s status as an Alternative
Investment Fund;
●
providing accounting, company secretarial and other administrative services to the Company
ensuring compliance with the applicable statutory and regulatory provisions; and
●
coordinating the delivery of services provided by the Company’s other third-party service providers.
Fund Manager The Fund Manager and his team are responsible for:
●
selecting the stocks held within the portfolio;
●
diversification and risk management through stock selection and size of investment;
●
determining the volume and timing of acquisitions and disposals; and
●
determining the frequency and level of gearing within the overall limits set by the Board.
Board composition
At the date of this report, the Board comprises seven
directors. Their biographies are on pages 26 and 27.
Appointment, tenure and retirement of directors
The Board may appoint directors at any time during
theyear. Any director so appointed stands for election
byshareholders atthe next annual general meeting.
Directors are generally expected to serve two terms of
threeyears, which may be extended to a third term, and
occasionally beyond, atthe discretion of the Board and
subject to satisfactory performance evaluation and annual
re-electionby shareholders.
All directors stand for re-election by shareholders annually
inkeeping with the provisions of the AIC Code. The articles
permit shareholders to remove a director before the end of
their term by passing an ordinary resolution at a general
meeting. An appointment may be terminated by either party
giving written notice without compensation payable.
Chairman’s tenure
Given the entirely non-executive nature of the Board and the
fact that the Chairman may not be appointed as such at the
time of their initial appointment as a director, the Chairman’s
tenure may be longer where this is considered by the Board to
be in the best interests of the Company. As with all directors,
the continuing appointment of the Chairman is subject to
satisfactory performance evaluation, annual re-election by
shareholders and may be further subject to the particular
circumstances of the Company at the time they intend to retire
from the Board. The directors are cognisant of the benefits of
regularly refreshing Board membership and seek to do so while
retaining a balance of knowledge of the Company which is of
particular importance given the entirely non-executive nature of
the Board, and the relationship with the investment manager.
Directors’ independence
The independence of the directors is determined with
reference to the AIC Code and is reviewed by the
Nominationand Remuneration Committee at least annually.
The Committee considers each of the director’s other
commitments, as well as their tenure and any connections
they may have with the investment manager or other key
service providers. Following completion of the evaluation
inJuly 2025 the Committee concluded that all directors
continued to be independent in character and judgement.
Simona Heidempergher has been a director for 11 years and
will retire from the Board at the forthcoming annual general
meeting on 24 November 2025. Theother directors consider
that she is, and has been, independent since her
appointment. Independence stems from the ability to make
decisions that conflict with the interest of the investment
manager and this is a function of confidence, integrity and
judgement. The Board is firmly of the view that length of
service does not impair a director’s ability to act
independently, but that the longer perspective adds value
tothe deliberations of the Board, especially in light of the
Company’s business model and the entirely non-executive
nature of the Board.
Corporate Governance Report (continued)
The European Smaller Companies Trust PLC Annual Report 2025
30
Ann Grevelius and Daniel Burgess have been directors for six
years. Following completion of the annual evaluation, the
Board has determined that it is in the interests of the Company
to extend their appointment for a further three years.
Diversity
The Board supports the principle of boardroom diversity,
ofwhich gender and ethnicity are two aspects. A third,
important aspect given the Company’s objective, is the
presence of Europe-based directors on the Board. Their input
at meetings allows the Board to stay in touch with sentiment
on the Continent.
The Company’s policy is that the Board should comprise
directors with a diverse range of skills, knowledge and
experience and that all appointments should be made on
merit, against objective criteria. Diversity ofperspectives and
backgrounds is therefore a key consideration in any director
search process. Alongside this, the Board will not discriminate
on the grounds of age, gender, personal background, sexual
orientation, disability or socio-economic background in
considering the appointment of directors.
The FCA’s Listing Rules require companies to report against
the following three diversity targets:
●
at least 40% of individuals on the board should be women;
●
at least one senior board position should be held by a
woman;
●
at least one individual on the board should be from a
minority ethnic background.
At the date of this report, the Board complies with the FCA’s
diversity targets.
Gender diversity
Number of
Board
members
% of the
Board
Number of
senior positions
on the Board
1
Men 3 43 1
Women 4 57 1
Ethnic diversity
White British or other
White (including
minority white groups 6 86 2
Other 1 14 –
1 As a fully managed investment trust, the Company has only two of the roles
specified by the UK Listing Rules, being the position of the Chairman and
Senior Independent Director
Directors’ conflicts of interest
The articles permit the Board to consider and, if it sees fit,
toauthorise situations where a director has an interest that
conflicts, or may possibly conflict, with the interests of the
Company (‘situational conflicts’). The Board has a formal
system in place for directors to declare situational conflicts to
be considered for authorisation by those directors who have
no interest in the matter being considered. In deciding
whether to authorise a situational conflict, the non-conflicted
directors must act honestly and in good faith with a view to
the best interests of the Company. The directors may impose
limits or conditions when giving the authorisation, or
subsequently, if they think this is appropriate.
Any situational conflicts which are considered, and authorised,
are recorded in the minutes. These are reviewed by the
Nomination and Remuneration Committee at least annually.
Directors’ induction and ongoing training
Newly appointed directors are offered a bespoke induction
programme which covers the legal and regulatory framework
for investment companies and the operations of the
investment manager, including the compliance and risk
management frameworks, accounting, sales and marketing,
and other administrative services.
Directors are provided with information on the Company’s
policies, regulatory and statutory requirements affecting the
Company, as well as changes to the directors’ responsibilities
as they arise.
Directors are encouraged to attend external training and industry
seminars, and may do so at the expense of the Company.
Directors’ time commitment
The Board expects directors to be able to devote sufficient
time to meet the demands of the business. Directors should
attend all scheduled meetings except when unforeseen and
serious circumstances arise at short notice. The Board
expects directors to be able to make themselves available at
reasonably short notice to consider any ad hoc matters
thatmay arise.
Directors’ other commitments are considered as part of the
candidate selection process for new appointments and
annually as part of the overall performance evaluation of
eachdirector.
The table below sets out individual directors’ attendance for
scheduled meetings. All directors in office at the time of the
annual general meeting held on 24 November 2024, attended
the meeting.
As a result of the requisition, tender offer and combination
with EAT, a further 14 Board and committee meetings were
held and three general meetings convened.
Board
Audit
Committee
Nomination
and
Remuneration
Committee
Management
Engagement
Committee
James Williams 5/5 5/5 3/3 1/1
Daniel Burgess 5/5 5/5 3/3 1/1
Ann Grevelius 5/5 5/5 3/3 1/1
Simona
Heidempergher 5/5 5/5 3/3 1/1
James Williams 5/5 5/5 3/3 1/1
Nadia Meier-
Kirner
1
2/2 2/2 1/1 1/1
1 Appointed as a director on 28 April 2025
Corporate Governance Report (continued)
The European Smaller Companies Trust PLC Annual Report 2025
31
Risk management and internal control
Framework of control
The Board has responsibility for determining the Company’s
overall risk appetite, establishing internal controls to ensure
operation within that appetite and for reviewing the
effectiveness of the internal controls in place.
The Board has established an ongoing process for identifying,
evaluating and managing the principal and emerging risks
faced by the Company. The process accords with the FRC’s
guidance on Risk Management, Internal Control and Related
Business and Financial Reporting published in September
2014. The principal and emerging risks faced by the Company
and mitigating measures in place, are documented in the Risk
Profile and Register which is kept under regular review by the
Audit Committee. The diagram on the following page
illustrates the Company’s framework.
The system was in operation throughout the year and up to the
date of this report. The system is designed to meet the specific
risks faced by the Company and takes account of the nature of
the Company’s reliance on its third-party service providers and
their internal controls. The system therefore manages rather
than eliminates the risk of failure to achieve the Company’s
business objectives and provides reasonable, but not absolute
assurance against material misstatement orloss.
The key components of the internal control framework include:
●
clearly defined investment criteria, specifying levels of
authority and exposure limits. The Board reviews reports
on investment performance against and in compliance
with the criteria at each meeting;
●
regular financial reporting which allows the Board to assess
the Company’s financial position. The management accounts
and forecasts are reviewed by the Board at each meeting;
●
contractual agreements with the investment manager and
all other third-party service providers. The Board reviews
performance levels and adherence to relevant provisions
in the agreements on a regular basis through reporting to
the Board and conducts a formal evaluation of the overall
level of service provided at least annually;
●
the review of internal controls at the investment manager
and other third-party service providers. The Board
receives quarterly reporting from the investment manager
and depositary, and reviews assurance reports on the
effectiveness of the control environments at the
Company’s key service providers; and
●
review of additional reporting provided by:
– the investment manager’s Operational Risk team on
the control environment in operation at the investment
manager and their view of the control environments in
place at the third-party service providers used by the
Company; and
– the investment manager’s Internal Audit team on areas
of operation which are relevant to the Company.
The Audit Committee’s usual review of the reports on the
effectiveness of internal controls in operation at its key service
providers identified that two reports had received qualified
opinions from the service auditor. The Audit Committee
considered the particular controls giving rise to the respective
qualifications, whether these had impacted the Company
directly and what corrective actions were being taken by
management. Following these discussions, the Audit
Committee was satisfied that the Company’s internal controls
had operated as intended and that the qualifications had no
direct impact on the Company.
The Board, assisted by the Audit Committee conducted a
review of the Company’s system of internal controls for the
year ended 30 June 2025 and is satisfied that it has not
identified or been advised ofany failings or weaknesses that
have been determined assignificant.
Internal audit function
Systems are in operation to safeguard the Company’s assets
and shareholders’ investments, to maintain proper accounting
records and ensure that financial information used within the
business, or published, is reliable.
The Company is an investment company, has no employees or
premises and delegates all operational activities to third-party
service providers, principally among them, the investment
manager. The Board places reliance on the Company’s
framework of internal control and the Audit Committee’s view
on reporting received from specific secondand third line of
defence teams at theinvestment manager.
The investment manager’s Operational Risk team support the
Audit Committee in considering the independently audited
reports on the effectiveness of internal controls in place at the
Company’s third-party service providers. The investment
manager’s Internal Audit function provides regular reporting to
the Board on the operations of the investment manager and
presents at least annually to the Audit Committee.
Given the level of independent review attached to reporting on
the effectiveness of internal controls at third-party service
providers and the access the Audit Committee has to the
investment manager’s Internal Audit department, the Board,
on the recommendation of the Audit Committee, has
concluded that it is not necessary at the present time for the
Company to have its own internal audit function.
By order of the Board
Janus Henderson Secretarial Services UK Limited
Corporate Secretary
20 October 2025
Corporate Governance Report (continued)
The European Smaller Companies Trust PLC Annual Report 2025
32
Corporate Governance Report (continued)
Principal third-party
service providers
The directors
●
receive regular
reporting at meetings;
●
review the assurance
report produced by
each organisation;
●
receive additional
reporting on the
control environment
from the investment
manager’s
Operational Risk
team;
●
receive reporting from
the investment
manager’s Internal
Audit team on areas
relevant to investment
trusts; and
●
formally evaluate their
performance on an
annual basis.
Secondary third-party
service providers
The directors
●
receive regular
reporting on their
activities at meetings;
and
●
formally evaluate their
performance on an
annual basis.
How the system of
internal control operates
The Board appoints third-party
service providers to undertake
the Company’s operational
activities. It maintains oversight
of these providers throughout
the year by receiving regular
reporting on their activities.
The Company’s principal
third-party service providers
are the investment manager
(JHI); the depositary/custodian
(HSBC) and the accountants
(BNP Paribas).
In respect of its principal
providers, the Board receives
quarterly reporting on
compliance with the control
environment and assesses the
effectiveness of the control
environment through review of
the assurance reports from
each organisation. This
reporting is supplemented by
the view of the investment
manager’s Operational Risk
team regarding the control
environments in operation at
the service providers.
The Company’s secondary
providers report regularly to the
Board. A failing in their services
is deemed to have a minimal
impact on the Company’s value
and therefore less stringent
reporting is required.
The Management Engagement
Committee formally evaluates
the performance and service
delivery of all third-party
service providers at least
annually.
The Audit Committee evaluates
the performance of the
statutory auditor on completion
of each audit cycle.
KPMG
(EU withholding tax)
Kepler
(Market research)
Janus
Henderson
(Investment
management,
company
secretarial,
sales, marketing,
PR and
administration)
Reporting
• Investment
performance
update at
each meeting
• Investment
Limits and
Restrictions
(monthly)
• Internal
Control
Report
(quarterly)
• Effectiveness
of control
environment
(annually)
HSBC
(Depositary/
custodian)
Reporting
• Depositary’s
Report
(quarterly)
• Presentation
from the
depositary
and custodian
(annually)
• Effectiveness
of control
environment
(semi-annually)
BNP Paribas
(Fund
administration
and accounting
services engaged
by the investment
manager)
Reporting
• Balance sheet
• Liquidity and
gearing
• Income
forecasts
• Portfolio
valuation
• Portfolio
transactions
• Effectiveness
ofcontrol
environment
(annually)
Equiniti
(Registrar)
Winterflood
(Corporate broker)
Board of Directors
(comprised entirely of non-executive directors)
Ernst & Young LLP
(Statutory Auditor)
Framework of Internal Controls
The European Smaller Companies Trust PLC Annual Report 2025
33
Audit Committee Report
Role
The Audit Committee is responsible for ensuring the
integrityofthe Company’s financial reporting, evaluating
theeffectiveness of the systems of internal control and risk
management and monitoring theeffectiveness and objectivity
of the external auditor.
Membership
All directors are members except the Chairman of the Board.
The Chairman is invited to meetings and usually attends
aspermitted.
The Board is satisfied that at least one member has recent
and relevant financial experience and the Committee as a
whole has competence relevant to the sector in which the
Company operates.
Meetings
The Committee usually meets five times a year. The
Company’s auditors, the Fund Manager and the investment
manager’s Financial Reporting Senior Manager are invited to
attend meetings ofthe Committee on a regular basis. Other
representatives ofthe investment manager and BNP Paribas
may also be invited to attend if requested by the Committee.
The Audit Committee Chairman meets with the audit partner
and audit manager without the presence of staff from the
investment manager at least twice each year.
Responsibilities
In discharging its duties over the course of the year, the
Committee considered:
●
the Company’s annual report and half-year financial
statements, the appropriateness of the accounting policies
applied and the use of the going concern basis for their
preparation;
●
the assessment of the principal and emerging risks facing
the Company and the long-term viability statement in light
of these risks;
●
the areas of judgement in the financial statements and the
performance fee calculation;
●
the overall approach to paying dividends and the
appropriate level of dividend to be paid in respect of the
year ended 30 June 2025;
●
the appointment and evaluation of the effectiveness and
objectivity of the auditor, and determining their remuneration;
●
agreeing the nature and scope of the statutory audit and
reviewing the auditor’s findings;
●
monitoring and evaluating the effectiveness of the
Company’s system of internal control and assessing the
need for a separate internal audit function;
●
the policy on the provision of non-audit services by the
auditor and the auditor’s independence; and
●
the whistleblowing arrangements in place at the
investment manager enabling staff to raise concerns
about possible improprieties inconfidence.
Effectiveness of the external audit
The Committee’s process for evaluating the effectiveness of
the external audit comprises two components; consideration
is given tothe findings of the FRC’s Audit Quality Inspection
Report and a post-audit assessment is carried out, led by the
Committee Chairman.
The auditor is able to present and discuss the findings of
thelatest Audit Quality Inspection Report and report on the
progress made by the firm in terms of addressing the areas
identified for improvement in the prior year’s report.
Inassessing the effectiveness of the audit process, the
Committee Chairman invites views from the directors, the
fund management team and other members of the investment
manager’s staff in assessing the robustness of the audit, level
of challenge offered by the audit team, the quality of the audit
team and timeliness of delivering the tasks required for the
audit and reporting to the Committee.
Following completion of the assessment, the Committee
remained satisfied with the effectiveness of the audit provided
byErnst & Young LLP (‘EY’) and therefore recommended their
continuing appointment to the Board. The auditor has
indicated theirwillingness to continue in office. Accordingly,
resolutions re-appointing EY as the auditor to the Company
and authorising thedirectors to determine their remuneration
will be proposed attheforthcoming annual general meeting.
Appointment and tenure of the auditor
Regulations currently in force require the Company to tender
the statutory audit every ten years and rotate audit firms every
20 years. EY was appointed as the auditor in2017 following
aformal tender process and presented their first report in
respect of the year ended 30 June 2018. Mike Gaylor is the
audit partner and has been in place for three years. Subject to
the audit remaining effective and thecontinuing agreement
from shareholders on the appointment of the auditor, the
Committee envisages carryingout anaudit tender process
towards the end of thecurrent audit partner’s tenure.
Auditor’s independence
The Committee monitors the auditor’s independence through
three aspects of its work; the approval of a policy regulating
the non-audit services that may be provided by the auditor
tothe Company, assessing the appropriateness of the fees
paidto the auditor and by reviewing the information and
assurances provided by the auditor on their compliance
withthe relevant ethical standards. EY has confirmed that
allof its partners and staff involved with the audit were
independent of any links to the Company, and that these
individuals had complied with their ethics and independence
policies and procedures which are fully consistent with the
FRC’s Ethical Standards.
The European Smaller Companies Trust PLC Annual Report 2025
34
Audit Committee Report (continued)
Significant issues
In relation to the annual report for the year ended 30 June 2025 the following significant issues were considered by the
Committee:
Significant issue How the Committee addressed the issue
Valuation and ownership
ofinvestments
The directors have appointed the investment manager, who outsources some of the
administration and accounting services to BNP Paribas, to perform the valuation of the
assets of the Company in accordance with its responsibilities under the AIFMD rules.
Asrequired under the AIFMD rules, the investment manager has adopted a written
valuation policy, which may be modified from time to time. Actively traded investments are
valued using stock exchange prices provided by third-party pricing vendors. Ownership of
listed investments is verified by reconciliation to the custodian’s records. The Board
monitors controls and significant movements in the portfolio by reviewing reports regularly
at Board meetings.
Recognition of income Income received has been accounted for in line with the Company’s accounting policies.
The Board reviews revenue forecasts in support of the Company’s future dividends at
each meeting, as well as the allocation between revenue and capital for special dividends.
Investment Trust status The Committee reviews the investment manager’s procedures for complying with
relevant regulations so as to ensure that the Company maintains its investment trust
status and regularly seeks confirmation of compliance with the relevant regulations.
Calculation of performance fee The Committee reviews the calculation of the performance fee to ensure consistency with
the application of the methodology.
Policy on the provision of non-audit services
The Committee has approved, and keeps under regular
review, thepolicy on the provision of non-audit services by the
auditor. Thepolicy sets out that the Company’s auditor will not
be considered for non-audit work where this is prohibited by
the current regulations and where it appears to affect their
independence and objectivity. In addition, the provision of any
non-audit services by the auditor is not permitted toexceed
70% of the average annual statutory audit fee for the
threeconsecutive financial periods preceding the financial
period towhich the cap applies. Such services require
approval in advance by the Audit Committee, or Audit
Committee Chairman, following due consideration of the
proposed services.
Since the appointment of EY in 2017, the auditor has not
provided any non-audit services to the Company.
Daniel Burgess
Chairman of the Audit Committee
20 October 2025
The European Smaller Companies Trust PLC Annual Report 2025
35
Role
The Management Engagement Committee is responsible for
formally evaluating the overall performance of the investment
manager and other third-party service providers engaged by
the Company.
Membership
The Committee is chaired by the Chairman of the Board.
Allofthe independent non-executive directors are members
of theCommittee.
Meetings
The Committee meets at least once a year.
Responsibilities
In discharging its duties over the course of the year, the
Committee considered:
●
the investment performance of the Company, taking
account of the benchmark and performance of
competitors in the closed-end and open ended sectors,
theshare price, level of discount and gearing;
●
the quality and experience of the team involved in
managing all aspects of the Company’s business;
●
the fee structures of its closed-end competitors and other,
similar sized investment companies, as well as open
ended alternatives;
●
the key clauses of the investment management
agreement, how the investment manager had fulfilled
these and whether these continued to be appropriate; and
●
the performance and fees of the Company’s other third-
party service providers, including the brokers, depositary,
registrar, research providers and legal counsel.
Re-appointment of the investment manager
Following completion of its reviews, the Committee concluded
that the continued appointment of the incumbent investment
manager remained in the best interests of the Company and
the shareholders, and therefore recommended to the Board
the re-appointment of JHI for a further year.
James Williams
Chairman
20 October 2025
Management Engagement Committee Report
The European Smaller Companies Trust PLC Annual Report 2025
36
Nomination and Remuneration Committee
Report
Role
The Nomination and Remuneration Committee is responsible
for ensuring Board composition remains balanced, a
transparent approach is used in the appointment of directors
and that appropriate plans are in place for succession
planning. The Committee further considers the overall policy
and approach to the remuneration of the non-executive
directors and makes recommendations to the Board on the
level of remuneration for individual roles.
Membership
The Committee is chaired by the Senior Independent Director.
Allof the independent non-executive directors are members
of the Committee.
Meetings
The Committee meets at least once a year to consider the
composition of the Board, succession planning, to review
theoutcome of the Board evaluation and to consider the
remuneration of individual directors. The Committee meets
more frequently when the recruitment process for new
directors is underway.
Responsibilities
In discharging its duties over the course of the year, the
Committee considered:
Nomination
●
the composition of the Board and each of its committees,
taking account of the skills, experience and knowledge of
each director and whether the diversity of these continued
to contribute to the success of the Company;
●
the outcomes of the annual performance evaluation with
aview as to whether adjustments should be made to the
number of directors or knowledge and skills represented
on the Board;
●
the tenure of each of the directors, giving consideration as
to whether the Board retained a sufficient balance of
length of service without becoming complacent;
●
the independence of the directors taking account of the
guidelines established by the AIC Code as well as the
directors’ other commitments;
●
the time commitment of the directors and whether this had
been sufficient over the course of the year;
●
succession planning for appointments to the Board taking
account of the tenure of the current directors and
recommendations of the AIC Code; and
●
the performance and contribution of the directors standing
for re-election at the Annual General Meeting 2025.
Remuneration
●
the Company’s remuneration policy with a view to
ensuring this continued to reflect market practice and
enable the Company to attract and retain an appropriate
calibre of director; and
●
the individual remuneration of the Chairman, Chairman
ofthe Audit Committee and other directors, making
appropriate recommendations to the Board based on
theirfindings.
Annual performance evaluation
Following external evaluation last year, the Board undertook
an internal evaluation of its own effectiveness, that of its
committees and individual directors. This was done using a
questionnaire probing views on how well oversight was
brought to the Company’s investment matters, overall strategy
and corporate issues, management of costs, understanding
of the various shareholders’ viewpoints and how well the
Company’s governance framework fared throughout
requisitioned general meeting and two corporate actions
dealtwith by the Board.
The Committee considered the outcomes of the review and
concluded that the Board understood the investment
objective and its application by the fund management team
and brought suitable challenge to the recommendations of the
investment manager. This was reflected in the mandate
parameters established by the Board and their regular
monitoring of these. The directors furthermore maintained
suitable oversight of gearing and the costs incurred in the
Company’s day-to-day operations.
The governance framework and decision-making processes
used by the Board were robustly tested by the requisitioned
general meeting, 42.5% tender offer and proposal for the
combination with EAT. The Committee discussed the formal
and informal lines of communication and authorisation
between the Board and investment manager and amongst
individual directors, concluding that these had worked well
and all directors were able to devote sufficient additional time
for these decisions to be carefully considered and approved
within the required timescales. The Committee therefore
concluded that the Board, its principal committees and
directors had operated effectively throughout the year.
The Committee considered the performance of the Chairman,
reviewing his ability to manage the regular Board business, as
well as his leadership over the course of the requisitioned
general meeting and two corporate actions, whether he
sought advice from a broad enough range of advisers and his
management of the group dynamics of the Board.
The Committee concluded that the Chairman had displayed
strong, independent leadership with the ability to draw views
from all directors into the decision-making process, while
sharing responsibilities for particular aspects across all directors.
Succession planning
To be effective a succession plan for Board membership must
maintain a balance of skills, experience and diversity, while
seeking to refresh these on a regular basis to ensure that the
Board’s oversight of its third-party service providers is
robustly challenged.
As part of this exercise, the Committee considered the
retirement of the Chair of the Remuneration and Nomination
Committee. Simona Heidempergher would be retiring at the
forthcoming annual general meeting and, taking account of
the Board’s succession plan, the Committee agreed that the
Chairman of the Board should take over this role on her
The European Smaller Companies Trust PLC Annual Report 2025
37
Nomination and Remuneration Committee
Report
(continued)
retirement, to lead on future succession planning. Bearing
inmind provisions in the AIC Code relating to directors’
remuneration, the Committee concluded that the Board as
awhole should therefore consider directors’ remuneration,
with the Senior Independent Director leading this session.
Arecommendation to this effect was made to the Board
and,following discussion, the Board agreed the change
whichwould become effective from Simona’s retirement
date.The Nomination and Remuneration Committee would
become the Nomination Committee at thispoint. The Board
further agreed with the Committee’s recommendation
thatAnn Grevelius succeed Simona as theSenior
Independent Director and become Chair of the Management
Engagement Committee.
The Committee further considered the two new directors
appointed following the successful completion of the
combination with EAT and adapted the succession plan
accordingly.
Director recruitment
As part of the Committee’s ongoing succession planning,
therecruitment for a further director was initiated during the
course of the year. Following consideration of the services
offered by several recruiters, the Committee appointed
Longwater Partners Limited (‘Longwater’) to assist with
thesearch. No other services are provided to the Company
by Longwater.
Longwater prepared a long list of suitable candidates who
were discussed in depth with the Committee. Following
discussion, a short list was drawn up and candidates invited
for interview. All directors had the opportunity to meet
withcandidates.
At the conclusion of the process, the Committee
recommended the appointment of Ms Meier-Kirner to the
Board. She had excellent investment experience in European
small-mid cap companies and brought substantial private
equity experience to the Board. Ms Meier-Kirner was based in
Germany and was therefore well positioned to keep the Board
in touch with sentiment in Europe’s largest economy.
Following consideration of the Committee’s recommendation,
the Board approved the appointment of Ms Meier-Kirner as a
director with effect from 28 April 2025.
As part of the considerations for the proposal put to the Board
of EAT and so as to ensure that the shareholder interests of
that trust continued to be represented at Board-level, two
directors from EAT were invited to join theBoard, conditional
on the successful completion of thecombination.
The Committee considered the experience of all EAT directors
in the context of the usual skills matrix and took feedback
from the team presenting to that board. Where the Committee
considered that EAT directors had complementary skills or
experience, and would fit with the existing dynamic of the
Board, further meetings were arranged enabling other
directors to have input to the selection process.
Following conclusion of the process, the Committee
recommended to the Board that Stuart Paterson and
KateCornish-Bowden be invited to join the Board on
thesuccessful completion of the combination.
Directors for re-election
The Committee considered the directors standing for
re-election at the forthcoming annual general meeting.
Theseincluded Ann Grevelius, Daniel Burgess and James
Williams. Taking account of the individual performance
evaluation of each director, the Committee recommended
tothe Board that it should support the re-election of
eachdirector.
Nadia Meier-Kirner would stand for election by shareholders
for the first time and, based on the recruitment process, the
Committee recommended that her nomination be supported.
Following conclusion of the process around EAT directors
inthe context of the proposed combination, the Committee
recommended to the Board that the nomination of Stuart
Paterson and Kate Cornish-Bowden as directors be
supported at the forthcoming annual general meeting.
Directors’ remuneration
The Company’s Remuneration Policy was considered by
theCommittee.
The demand on directors’ time over the course of the last ten
months had been significant as a result of the requisitioned
general meeting and two corporate actions over that period
and the Committee concluded that the policy should be
expanded to enable additional payments to be made to
directors where they had undertaken duties beyond those
normally expected of a non-executive director. The Committee
concluded that this was likely to be a rare occurrence and that
any discretionary fees paid should be clearly disclosed in the
annual report accompanied by an explanation of the work
undertaken and why it was deemed necessary to pay such
additional remuneration.
The Committee recommended to the Board that an updated
Remuneration Policy be put to shareholders at the
forthcoming annual general meeting. The proposed changes
are set out in the Directors’ Remuneration Report and
shareholders will be asked to adopt a new Remuneration
Policy at the forthcoming annual general meeting.
Simona Heidempergher
Chair of the Nomination and Remuneration Committee
20 October 2025
The European Smaller Companies Trust PLC Annual Report 2025
38
Directors’ Remuneration Report
Background to the proposed change to
thePolicy
At the forthcoming annual general meeting, shareholders will
be asked to approve a new Policy, with the change to the
current Policy being that the directors may further be eligible
to receive additional remuneration, in exceptional
circumstances, for duties beyond those normally expected as
part of a non-executive director’s appointment. This is
expected to be a rare occurrence and any discretionary fees
paid to the directors will be clearly disclosed in the Directors’
Remuneration Report for the year accompanied by an
explanation of the work undertaken and why it was deemed
necessary to pay such additional remuneration.
Although the Board will retain discretion to make further
payments in the event exceptional circumstances arise, if the
new Policy is approved by shareholders, the Board’s intention
is to make two additional payments to directors shortly
following shareholder approval. The first, in respect of the
additional work undertaken for the requisitioned general
meeting held on 5February 2025 and subsequent tender
offer, and the second, in respect of the combination with EAT.
Requisitioned general meeting and tender offer
Ten additional Board and committee meetings were held to
consider these matters and approve documentation and
announcements for release to shareholders and the market. In
addition, the directors attended numerous update and briefing
calls, and the Chairman undertook a number ofmeetings with
journalists and the chairs of the other requisitioned trusts. A
breakdown of the proposed payments isset out in the table below.
Director Amount £
James Williams (Chairman) 40,000
Daniel Burgess 20,000
Ann Grevelius 20,000
Simona Heidempergher 20,000
Total 100,000
Combination with EAT
It is also intended that further payments totalling £60,000
willbe made to directors in respect of the additional work
undertaken on the combination with EAT. Four further Board
and committee meetings were held to approve the scheme
documentation, alongside numerous ad hoc discussions.
Thedirectors were in involved in formulating the structure of
the proposal and in presenting to the EAT Board.
Director Amount £
James Williams (Chairman) 20,000
Daniel Burgess 10,000
Ann Grevelius 10,000
Simona Heidempergher 10,000
Nadia Meier-Kirner 10,000
Total 60,000
Remuneration Policy
The Remuneration Policy (the ‘Policy’) sets out the
principles applied in the remuneration of the Company’s
directors. The current Policy has been in place since 1 July
2013 and was last approved by shareholders at the annual
general meeting on 27 November 2023. A resolution to
adopt a new Policy will be put to shareholders at the
forthcoming annual general meeting. The new Policy is set
out below.
The Board’s approach is that fees payable to the directors
should:
●
reflect the time spent by them on the Company’s
affairs;
●
reflect the responsibilities borne by them as directors;
●
be sufficient to promote the long-term success of the
Company; and
●
not exceed the aggregate limit set out in the articles
ofassociation (£500,000 per annum following approval
by shareholders at the general meeting held on
3October 2025).
Directors are remunerated in the form of fees which are
payable quarterly in arrears. No director is eligible to
receive bonuses, pension benefits, share options or other
benefits and no long-term incentive schemes are in place.
The directors may be reimbursed for all reasonable and
properly documented expenses incurred in the performance
of their duties.
In a proposed change to the current Policy (subject to
shareholder approval) which is explained in the column
alongside under ‘Background to the proposed change to
the Policy’, the directors may further be eligible to receive
additional remuneration, in exceptional circumstances, for
duties beyond those normally expected as part of a
non-executive director’s appointment.
The level of remuneration paid to each director is reviewed
annually, although such review will not necessarily result in
a change to the fee. Feedback from shareholders on the
fees paid to directors is taken into account by the Board
when reviewing remuneration levels.
All directors are non-executive and appointed under a letter
of appointment, which is an engagement for services and
not a contract of employment. The appointment may be
terminated at any time by written notice with no
compensation payable. All directors, including any new
appointments to the Board, are paid at the same rate. The
Chairman of the Board, Senior Independent Director and
Chairman of the Audit Committee are paid a higher fee in
recognition of their additional responsibilities.
If approved by shareholders, the new Policy will take effect
from the date of the forthcoming annual general meeting.
The Policy, irrespective of changes, is put to shareholders
at intervals of not more than three years.
The European Smaller Companies Trust PLC Annual Report 2025
39
Directors’ Remuneration Report (continued)
Statement from the Chairman
As the Company has no employees and all directors are
non-executive, the Board has not established a separate
Remuneration Committee. The Nomination and Remuneration
Committee, led by the Senior Independent Director, has
considered the proposed changes to the Remuneration Policy
and the fees paid to individual directors. From the end of the
forthcoming annual general meeting, the Board as a whole,
led by the Senior Independent Director, will consider
remuneration matters and the Nomination and Remuneration
Committee will become the Nomination Committee.
The Nomination and Remuneration Committee reviewed the
fees paid to directors of similar sized trusts, the AIC peer
group and other trusts managed by the investment manager.
Alongside this, the Committee considered the rate of inflation
and the responsibilities borne by directors. Following
completion of this review, increases in directors remuneration
were recommended to and approved by the Board. The rates
are set out in the table titled ‘Directors’ fees’ in the next
column. The increases were to ensure that the directors are
properly remunerated for their services to the Company and
so thattheCompany can remain competitive when seeking
newdirectors.
The Board is satisfied that the changes to directors’
remuneration are compliant with the Company’s
Remuneration Policy which was approved by shareholders
atthe annual general meeting held in 2023. Shareholders are
being asked to consider amending the Remuneration Policy
toallow additional payments to be made to directors in
exceptional circumstances for duties beyond those normally
expected as part of a non-executive director’s appointment.
Annual Report on Implementation
The Directors’ Remuneration Report (the ‘Report’) is prepared
inaccordance with Schedule 8 of The Large and Medium-
sized Companies and Groups (Accounts and Reports)
Regulations 2008 as amended in August 2013 (the ‘Regulations’).
Aresolution to approve this Report will be put to shareholders
atthe annual general meeting to be held on 24 November 2025.
The Company’s auditor is required to report on certain
information contained within this report. Where information
has been audited it is indicated as such.
All of the directors are non-executive and the Company has no
chiefexecutive officer or employees; as such some of the reporting
requirements contained in the Regulations are not applicable
and have not been reported on, including the requirement for an
illustrative representation of the level of remuneration that could
be received by each individual director. All relevant information
isdisclosed within this Report in an appropriate format.
Directors’ fees
The current fees for specific roles are set out in the table
below.
Role
From
1 July 2025
At
30 June 2025
At
30 June 2024
Chairman of
theBoard 53,200 51,100 49,600
Chairman
oftheAudit
Committee
42,500 40,850 39,650
Senior
Independent
Director
1
40,500 n/a n/a
Director 37,500 36,050 35,000
With effect from 1 July 2025, the Senior Independent Director
receives an additional £3,000 per annum (prior years no
additional fee has been paid).
Directors’ interests in shares (audited)
The interests of the directors in the ordinary shares of the
Company at the beginning and end of the financial year under
review are set out in the table below.
Director 30 June 2025 30 June 2024
James Williams 18,000 18,000
Daniel Burgess 32,000 32,000
Ann Grevelius 15,000 15,000
Simona Heidempergher 12,800 12,800
Nadia Meier-Kirner
1
– n/a
1 Appointed as a director on 28 April 2025
Kate Cornish-Bowden and Stuart Paterson were appointed
asnon-executive directors on 16 October 2025 following
completion of the combination with EAT. Kate holds 38,559
shares in the Company, and Stuart holds 51,413 shares in
theCompany.
Total return performance over ten years
The graph illustrates the Company’s share price total return
performance compared with that of the benchmark over a
ten-year period. The analysis assumes £100 invested on
30June 2015 with all dividends reinvested.
Share price total return Benchmark total return
£
20232022202120202019201820172016 2024 20252015
50
100
150
200
250
300
350
The European Smaller Companies Trust PLC Annual Report 2025
40
Annual percentage change
The table below sets out the annual percentage change in directors fees for the five years to 30 June 2025.
Director
30 June 2025
%
30 June 2024
%
30 June 2023
%
30 June 2022
%
30 June 2021
%
James Williams
1
3.0 n/a n/a n/a n/a
Daniel Burgess 3.0 3.0 9.4 3.5 0.0
Ann Grevelius 3.0 3.0 9.4 3.5 0.0
Simona Heidempergher 3.0 3.0 9.4 3.5 0.0
Nadia Meier-Kirner
2
n/a n/a n/a n/a n/a
Christopher Casey
3
3.0 3.0 9.4 15.8 4.4
1 Appointed as Chairman on 25 November 2024
2 Appointed as a director on 28 April 2025
3 Retired as a director on 25 November 2024
Relative importance of spend on pay
The table below sets out the total level of directors’ remuneration compared to the distributions paid to shareholders by way
ofdividends. During the year, the Company repurchased and cancelled 2,655,272 (2024: 3,579,578) ordinary shares at a cost
of£4,720,000 (2024: £6,140,000), and repurchased 1,011,095 ordinary shares for treasury (2024: nil), at a cost of £1,848,000
(2024: nil). On15 April 2025, the Company announced a tender offer to buy back up to 42.5% of the ordinary share capital which
resulted in the repurchase of a total of 166,097,075 ordinary shares, of which 115,386,122 ordinary shares were cancelled and
50,710,953 ordinary shares were deposited in treasury. For further information see note 22. There were no other significant
distributions or uses of the Company’s profit which would assist in the understanding of relative importance of spend on pay.
Year ended
30 June 2025
£
Year ended
30 June 2024
£
Year ended
30 June 2025
% change
Year ended
30 June 2024
% change
Total remuneration paid to directors
1
200,084 184,888 8.2 2.1
Dividends paid on ordinary shares 18,903,134 18,806,180 0.5 3.1
1 Changes will fluctuate due to the number of directors in any one year
Directors’ remuneration (audited)
The remuneration paid to the directors serving during the years ended 30 June 2025 and 2024 is set out in the table below.
Director
Year ended
30 June 2025
Fees
£
Year ended
30 June 2025
Total expenses
and taxable
benefits
£
Year ended
30 June 2025
Total
£
Year ended
30 June 2024
Fees
£
Year ended
30 June 2024
Total expenses
and taxable
benefits
£
Year ended
30 June 2024
Tota l
£
James Williams
1
45,048 1,593 46,641 23,302 – 23,302
Daniel Burgess
2
40,850 1,271 42,121 39,650 – 39,650
Ann Grevelius 36,050 6,343 42,393 35,000 1,587 36,587
Simona Heidempergher 36,050 1,264 37,314 35,000 749 35,749
Nadia Meier-Kirner
3
6,338 – 6,338 – – –
Christopher Casey
4
20,551 4,726 25,277 49,600 – 49,600
Total 184,887 15,197 200,084 182,552 2,336 184,888
Notes:
The table above omits other columns set out in the relevant Regulations because no payments of other types such as performance related pay, vesting performance
related pay and pension related benefits were made.
1 Appointed as Chairman of the board on 25 November 2024. Highest paid director
2 Chairman of the Audit Committee
3 Appointed as a director on 28 April 2025, fees paid on 25 September 2025 in respect of the period 28 April to 30 June 2025
4 Retired as director on 25 November 2024
Directors’ Remuneration Report (continued)
The European Smaller Companies Trust PLC Annual Report 2025
41
Statement of voting at annual general meeting
Shareholders have a binding vote on the Company’s remuneration policy every three years and vote to receive the Remuneration
Report each year. The table below sets out the votes received in respect of the last time each such resolution was proposed.
Resolution
For (incl
discretionary) % of votes
1
Against % of votes Withheld
Remuneration Policy
(last voted on 27 November 2023) 172,317,881 99.6 648,741 0.4 850,198
Remuneration Report
(last voted on 24 November 2024) 85,801,515 99.5 455,444 0.5 320,823
1 The percentage of votes excludes votes withheld
Simona Heidempergher
Chair of the Nomination and Remuneration Committee
20 October 2025
Directors’ Remuneration Report (continued)
The European Smaller Companies Trust PLC Annual Report 2025
42
Directors’ Report
The directors present their report and the Company’s audited
financial statements for the year ended 30 June 2025.
The Corporate Governance Report, committee reports and
Additional Information on pages 28 to 38 and 78 to 85 form
part of the Directors’ Report.
Share capital
The Company has a single class of shares being the ordinary
shares of 1.5625p each. At 30 June 2025, the Company’s
paid up share capital consisted of 279,246,204 ordinary
shares of 1.5625p each. This follows the cancellation of
115,386,122 ordinary shares repurchased by the Company as
part of the tender offer. A total of 51,722,048 ordinary shares
are held in treasury resulting in a total voting rights figure of
227,524,156 ordinary shares.
At the annual general meeting held on 24 November 2024,
shareholders authorised the directors to allot up to 39,381,530
ordinary shares (10% of the issued share capital at the date of
the resolution) and to repurchase up to 59,032,913 (14.99%
ofthe issued share capital at the date of the resolution). On
7May 2025, shareholders further approved the repurchase of
up to 167,372,000 ordinary shares under the terms of the
42.5% tender offer. The total number of shares repurchased
under these authorities amounted to 166,291,142 ordinary
shares (194,067 shares under authority granted at the annual
general meeting and 166,097,075 shares under authority for
the tender offer). A further 11,628 shares have been
repurchased since the year end to the date of this report.
At the general meeting held on 3 October 2025, shareholders
authorised the allotment of ordinary shares up to an aggregate
nominal value of £3,125,000 in connection with the combination
with EAT. On completion of the combination on 15 October
2025, a total of 131,128,841 ordinary shares were issued to
EAT shareholders rolling their investment over to the Company.
The authorities to allot and repurchase shares will expire at
the earlier of 15 months from the date ofthe passing of the
resolution or the next annual general meeting. Directors will
be seeking to renew the authority toallot and repurchase
shares at the forthcoming annual generalmeeting.
There are no restrictions concerning the transfer of securities
in the Company, no special rights with regard to control
attached to securities, no restrictions on voting, no
agreements between holders of securities regarding their
transfer known to the Company and no agreement which the
Company is party to that affects its control following a
takeover bid. To the extent that they exist, the revenue profits
of the Company (including accumulated revenue reserves) are
available for distribution by way of dividends to the holders of
the ordinary shares. Upon a winding-up, after meeting the
liabilities of the Company, the surplus assets would be
distributed to the shareholders pro rata to their holding of
ordinary shares.
Holdings in the Company’s shares
At 30 June 2025, Janus Henderson Group notified a holding
of 8.5% in accordance with the Disclosure Guidance and
Transparency Rules. Subsequent to the year end, further
notifications have been received confirming that this holding
has been reduced to nil. On 16 September, City of London
Investment Management Company Limited notified the
Company that their holding had reached 5.3%. Nofurther
notifications have been received up to the date ofthis report.
Borrowings
The Company has a secured multi-currency overdraft
arrangement with HSBC Bank plc that allows it to borrow
upto the lesser of £160 million and 25% of custody
assetsasand when required. At 30 June 2025, £8.2m
(2024:£90.2m) of the facility was drawn down.
Directors’ insurance and indemnification
Directors’ and officers’ liability insurance cover is in place
which indemnifies the directors against certain liabilities
arising from carrying out their duties. The Company’s articles
and the provisions of English law permit a qualifying third
party provision indemnity to be provided to directors in
respect of costs which they may incur relating to the defence
of any proceedings brought against them arising from their
positions as directors, in which they are acquitted or judgment
is given in their favour by the Court. The Company has
granted such an indemnity to each director to the extent
permitted by law in respect of the liabilities that may attach
tothem in their capacity as directors of the Company.
Related party transactions
The Company’s transactions with related parties in the year
were with the directors and the investment manager.
There have been no material transactions between the
Company and its directors during the year. The only amounts
paid to them were in respect of remuneration and expenses,
for which there were no outstanding amounts payable at the
year end.
In relation to the provision of services by the investment
manager, other than fees payable by the Company in the
ordinary course of business and the provision of marketing
activities, there have been no material transactions affecting
the financial position of the Company during the year under
review. More details on transactions with the investment
manager, including amounts outstanding at the year end,
aregiven in note 20 on page 75.
During the year, Saba Capital Management, L.P. (‘Saba’) held
29.0% of the Company’s issued share capital. Saba
participated in the tender offer, entering into agreements with
the Company regarding the tender of their shares and a
standstill agreement. The entire in specie transaction detailed
in note 22 on page 76 related to their holding.
The European Smaller Companies Trust PLC Annual Report 2025
43
Annual General Meeting
The Company’s annual general meeting will be held at 12.30 pm
on Monday 24 November 2025 at 201 Bishopsgate, London
EC2M 3AE. For those unable to travel, the event will be streamed
live on the internet: www.janushenderson.com/esct-agm.
Voting will be on a show of hands. Shareholders unable to
attend, are encouraged to submit their vote using the proxy
form provided or through the share dealing platform where
their shares are held.
Instructions on attending the meeting and details of resolutions
to be put to shareholders are set out in the Notice of Meeting
on page 86 of this annual report.
Voting recommendation
The Board considers that the resolutions to be proposed at
the meeting including the continuation vote, are in the best
interests of the shareholders as a whole and therefore
recommends that shareholders vote in favour of each
resolution, as the directors intend to do in respect of their own
beneficial holdings.
Directors’ statement as to disclosure of
information to the auditor
Each director at the date of approval of this report confirms
that to the best of their knowledge and belief, there is no
information relevant to the preparation of the annual report of
which the Company’s auditor is unaware and they have taken
all the steps a director might reasonably be expected to have
taken to be aware of relevant audit information and to establish
that the Company’s auditor is aware of that information.
Single identifiable table
UK Listing Rule 6.6.4R requires the Company to include
certain information in a single identifiable section of the annual
report or a cross reference table indicating where the
information is set out. There are no disclosures to be made in
this regard.
Modern slavery, bribery and tax evasion
As the Company’s operations are delegated to third-party
service providers, the Board seeks assurances, at least
annually, from its suppliers that they comply with the
provisions of the UK Modern Slavery Act 2015 and maintain
adequate safeguards in keeping with the provisions of the
Bribery Act 2010 and Criminal Finances Act 2017.
Company’s structure
The Company is an investment company as defined in section
833 of the Companies Act 2006 and operates as an
investment trust in accordance with section 1158 of the
Corporation Tax Act 2010 as amended. The directors are of
the opinion that the Company has conducted its affairs in
compliance with section 1158 since approval was granted and
intends to continue to do so.
The Company is listed on the Main Market of the London
Stock Exchange and is subject to the Listing Rules,
Prospectus Regulation Rules and Disclosure Guidance and
Transparency Rules published by the Financial Conduct
Authority. The Company is a member of the Association of
Investment Companies.
The Company, and the Board, is governed by its articles of
association, amendments to which must be approved by
shareholders by way of a special resolution.
By order of the Board
Janus Henderson Secretarial Services UK Limited
Corporate Secretary
20 October 2025
Directors’ Report (continued)
The European Smaller Companies Trust PLC Annual Report 2025
44
Statement of Directors’ Responsibilities
The directors are responsible for preparing the annual report
and thefinancial statements in accordance with applicable
law and regulations. Company law requires the directors to
prepare financial statements for each financial year. Under
that law the directors have prepared the Company’s financial
statements in accordance with UK adopted International
Accounting Standards.
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 and of the profit or loss
of the Company for that year.
In preparing these financial statements, the directors are
required to:
●
select suitable accounting policies in accordance with
IAS8 Accounting Policies, Changes in Accounting
Estimates and Errors and then apply them consistently;
●
make judgements and accounting estimates that are
reasonable and prudent;
●
state whether applicable UK adopted International
Accounting Standards have been followed, subject to any
material departures disclosed and explained in the
financial statements; and
●
prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Company will continue in business.
The directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
theCompany’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
andthe Directors’ Remuneration Report 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 offraud
and other irregularities.
The directors consider that the annual report, taken as a
whole, isfair, balanced and understandable, and provides
theinformation necessary for shareholders to assess the
Company’s position and performance, business model
andstrategy.
Directors’ responsibility statements
Each of the directors in office at the date of this report,
confirms that, to the best of their knowledge:
●
the financial statements prepared in accordance with
UKadopted International Accounting Standards give a
true and fair view of the assets, liabilities, financial position
and profit and loss of the issuer and the undertakings
included in the financial statements as a whole; and
●
the Strategic Report includes a fair review of the
development and performance of the business and the
position of the Company, together with a description of the
principal risks and uncertainties that it faces.
For and on behalf of the Board
Daniel Burgess
Chairman of the Audit Committee
20 October 2025
The European Smaller Companies Trust PLC Annual Report 2025
45
Financial
statements
Andritz, 1.3% of the portfolio
Supplier of plants, equipment, automation solutions and services
for the hydropower, paper and pulp and steel industries
46
Independent auditor’s report to the members
of The European Smaller Companies Trust PLC
Opinion
We have audited the financial statements of The European Smaller Companies Trust PLC (‘the Company’) for the year ended
30June 2025 which comprise the Statement of Comprehensive Income, the Statement of Changes in Equity, the Balance Sheet,
the Cash Flow Statement and the related notes 1 to 23, including material accounting policy information. The financial reporting
framework that has been applied in their preparation is applicable law and UK adopted International Accounting Standards.
In our opinion, the financial statements:
●
give a true and fair view of the Company’s affairs as at 30 June 2025 and of its profit for the year then ended;
●
have been properly prepared in accordance with UK adopted International Accounting Standards; and
●
have been prepared in accordance with the requirements of the Companies Act 2006.
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.
Independence
We are 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 public interest entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Company and we remain independent
of Company in conducting the audit.
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 the following procedures:
●
Confirming our understanding of the Company’s going concern assessment process by engaging with the directors and the
Company Secretary to determine if all key factors were considered in their assessment.
●
Inspecting the directors’ assessment of going concern, including the revenue forecast, for the period to 20 October 2026
which is at least 12 months from the date these financial statements are authorised for issue. In preparing the revenue
forecast, the Company has concluded that it is able to continue to meet its ongoing costs as they fall due.
●
Reviewing the factors and assumptions, including the impact of the current economic environment and other significant
events that could give rise to market volatility, as applied to the revenue forecast and the liquidity assessment of the
investments. We considered the appropriateness of the methods used to calculate the revenue forecast and the liquidity
assessment and determined, through testing of the methodology and calculations, that the methods, inputs and assumptions
utilised were appropriate to be able to make an assessment for the Company.
●
Considering the mitigating factors included in the revenue forecast that are within the control of the Company. We reviewed
the Company’s assessment of the liquidity of investments held and evaluated the Company’s ability to sell those investments
to cover the working capital requirements should revenue decline significantly.
●
Assessing the risk of breaching the covenants applicable to the overdraft facility as a result of a reduction in the value of the
Company’s investment portfolio. We calculated the Company’s compliance with these covenants and performed reverse
stress testing in order to identify what factors would lead to the Company breaching those covenants.
●
Reviewing the Company’s going concern disclosures included in the annual report in order to assess that the disclosures
were appropriate and in conformity with the reporting standards.
●
For the continuation vote to be held at the AGM in 2025, reviewing analysis of the shareholder base; reviewing results of
previous AGMs to establish voting patterns; and obtaining feedback from the Company’s shareholders and brokers on their
assessment of expected voting intentions, to ascertain the likely outcome of the vote.
The European Smaller Companies Trust PLC Annual Report 2025
47
Independent auditor’s report to the members
of The European Smaller Companies Trust PLC
(continued)
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 to
20October 2026 which is at least 12 months from the date these financial statements are authorised for issue.
In relation to the Company’s reporting on how they have 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. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the
Company’s ability to continue as a going concern.
Overview of our audit approach
Key audit matters
●
Risk of incomplete or inaccurate revenue recognition, including classification of special
dividends as revenue or capital items in the Statement of Comprehensive Income.
●
Risk of incorrect valuation or ownership of the investment portfolio.
●
Risk of incorrect calculation of the performance fees.
Materiality
●
Overall materiality of £5.11m which represents 1% of net assets.
An overview of the scope of our audit
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit
scope for the Company. This enables us to form an opinion on the financial statements. We take into account size, risk profile,
the organisation of the Company and effectiveness of controls, the potential impact of climate change and changes in the
business environment when assessing the level of work to be performed. All audit work was performed directly by the audit
engagement team.
Climate change
There has been increasing interest from stakeholders as to how climate change will impact Companies. The Company has
determined that the impact of climate change could affect the Company’s investments. This is explained in the principal and
emerging risks and uncertainties section on page 17, which forms part of the ‘Other information’, rather than the audited financial
statements. Our procedures on these disclosures therefore consisted solely of considering whether they are materially
inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appear to be
materially misstated.
Our audit effort in considering climate change was focused on the adequacy of the Company’s disclosures in the financial
statements as set out in note 1(a) and conclusion that there was no further impact of climate change to be taken into account as
the investments are valued based on market pricing as required by UK adopted International Accounting Standards. We also
challenged the directors’ considerations of climate change risks in their assessment of going concern and viability and
associated disclosures.
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. These matters included 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
ofthe financial statements as a whole, and in our opinion thereon, and we do not provide a separate opinion on these matters.
The European Smaller Companies Trust PLC Annual Report 2025
48
Independent auditor’s report to the members
of The European Smaller Companies Trust PLC
(continued)
Risk Our response to the risk Key observations communicated to
the Audit Committee
Incomplete or inaccurate revenue
recognition, including the
classification of special dividends as
revenue or capital items in the
Statement of Comprehensive Income
(as described on page 35 in the Audit
Committee Report and as per the
accounting policy set out on page 60).
The total revenue for the year to
30June 2025 was £20.70m (2024:
£25.48m), consisting primarily of
dividend income from listed equity
investments.
The Company received seven special
dividends amounting to £3.37m
(2024:£4.88m), of which £0.74m
(2024:£1.91m) was classified as
revenue and £2.63m (2024: £2.97m)
was classified as capital.
There is a risk of incomplete or
inaccurate recognition of revenue
through the failure to recognise proper
income entitlements or to apply an
appropriate accounting treatment.
The directors may be required to
exercise judgement in determining
whether income receivable in the form
of special dividends should be
classified as ‘revenue’ or ‘capital’ in the
Statement of Comprehensive Income.
We have performed the following
procedures:
●
We obtained an understanding of the
processes and controls surrounding
revenue recognition, including the
classification of special dividends by
performing walkthrough procedures.
●
For 100% of dividends received and
accrued, we recalculated the income
by multiplying the investment
holdings at the ex-dividend date,
traced from the accounting records,
by the dividend per share, which was
agreed to an independent data
vendor. We also agreed all exchange
rates to an independent data vendor
and agreed a sample of dividend
receipts to bank statements.
●
For 100% of dividends accrued, we
reviewed the investee company
announcement to assess whether
the dividend entitlements arose prior
to 30 June 2025.
●
To test completeness of recorded
income, we verified that expected
dividends for each investee company
held during the year had been recorded
as income with reference to investee
company announcements obtained
from an independent data vendor.
●
For all investments held during the
year, we inspected the type of
dividends paid with reference to an
external data vendor to identify those
which were special dividends. For
three special dividends classified as
capital and one classified as revenue,
we assessed the appropriateness of
management’s classification by
reviewing the underlying rationale for
the distributions.
The results of our procedures identified
no material misstatement in relation to
incomplete or inaccurate revenue
recognition, including incorrect
classification of special dividends as
revenue or capital items in the
Statement of Comprehensive Income.
The European Smaller Companies Trust PLC Annual Report 2025
49
Risk Our response to the risk Key observations communicated to
the Audit Committee
Incorrect valuation or ownership of
the investment portfolio (as
described on page 35 in the Audit
Committee Report and as per the
accounting policy set out on page 60).
The valuation of the investment
portfolio at 30 June 2025 was
£517.34m (2024: £883.84m) consisting
of listed investments.
The valuation of the investments held
by the Company is the key driver of
the Company’s net asset value and
total return. Incorrect investment
pricing, or a failure to maintain proper
legal title of the assets held by the
Company could have a significant
impact on the net asset value and the
return generated for shareholders.
The fair value of listed investments is
determined by reference to stock
exchange quoted market bid prices
atthe close of business on the
reporting date.
We have performed the following
procedures:
●
We obtained an understanding of
the processes and controls
surrounding investment valuation
and legal title of listed investments
by performing walkthrough
procedures.
●
For 100% of investments in the
portfolio, we compared the market
prices and exchange rates to an
independent pricing vendor and
recalculated the investment
valuations as at the year end.
●
For all investments in the portfolio,
we obtained the market prices from
an independent pricing vendor for
five business days pre and post the
year end date and calculated the
day-on-day movements to identify
any stale prices. We verified that the
listed prices are valid fair values
through review of trading activity.
●
We compared the Company’s
investment holdings at 30 June
2025 to an independent
confirmation received directly from
the Company’s custodian.
The results of our procedures
identified no material misstatement in
relation to the risk of incorrect
valuation or ownership of the
investment portfolio.
Independent auditor’s report to the members
of The European Smaller Companies Trust PLC
(continued)
The European Smaller Companies Trust PLC Annual Report 2025
50
Risk Our response to the risk Key observations communicated to
the Audit Committee
Risk of incorrect calculation of the
performance fees (as described on
page 35 in the Audit Committee
Report and as per the accounting
policy set out on page 60).
The investment manager is eligible to
receive a performance related fee
when certain criteria are met, as
prescribed in the management
agreement. The performance fee for
the year to 30 June 2025 was £1.78m
(2024: £0.57m).
The performance fee is calculated as
15% of the positive difference between
the average annual NAV total return
and the average annual total return of
the benchmark, measured over a
three-year rolling period. The upper
limit on the total fee (management and
performance fee) is 2% of the year end
net asset value. A performance hurdle
over the benchmark of 1% must be
reached before any performance fee
can be earned and is excluded from
the performance fee itself, should one
be payable.
There is a risk that the performance
fee is not calculated correctly, in
accordance with the management
agreement or that the methodology is
open to misinterpretation.
We performed the following
procedures:
●
We obtained an understanding
ofthe processes and controls
surrounding the performance
feecalculation by performing
walkthrough procedures.
●
We reviewed the investment
management agreement to assess
the conditions that result in a
performance fee being payable.
●
We performed a recalculation of the
performance fee payable based on
the calculation methodology set out
in the investment management
agreement.
●
We agreed the key inputs of the
calculation to underlying financial
records, the IMA and external
vendor data.
●
We verified that the performance
hurdle was reached and excluded
from the performance fee itself. We
also verified that the upper limit on
the total fee (management and
performance fees) of 2% of year end
net asset value was notbreached.
The results of our procedures identified
no material misstatement in relation to
the risk of incorrect calculation of the
performance fees.
There have been no changes to the areas of audit focus raised in the above risk table from the prior year.
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on
the audit and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence
the economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and
extent of our audit procedures.
We determined materiality for the Company to be £5.11m (2024:£7.99m), which is 1% (2024: 1%) of net assets. We believe that
net assets provide us with a materiality aligned to the key measure of the Company’s performance.
During the course of our audit, we reassessed initial materiality and found no reason to later the basis of calculation at year end.
Independent auditor’s report to the members
of The European Smaller Companies Trust PLC
(continued)
The European Smaller Companies Trust PLC Annual Report 2025
51
Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low
level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the Company’s overall control environment, our
judgement was that performance materiality was 75% (2024: 75%) of our planning materiality, namely £3.83m (2024: £5.99m).
Given the importance of the distinction between revenue and capital for investment trusts, we have also applied a separate
testing threshold for the revenue column of the Statement of Comprehensive Income of £0.87m (2024: £1.13m) being 5%
(2024:5%) of the revenue profit before taxation.
Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of £0.26m
(2024:£0.40m), which is set at 5% of planning materiality, as well as differences below that threshold that, in our view, warranted
reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of
other relevant qualitative considerations in forming our opinion.
Other information
The other information comprises the information included in the annual report other than the financial statements and our
auditor’s report thereon. The directors are responsible for the other information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated
in this report, we do 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 the other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the
Companies Act 2006.
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 directors’ reports have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
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 directors’ report.
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.
Independent auditor’s report to the members
of The European Smaller Companies Trust PLC
(continued)
The European Smaller Companies Trust PLC Annual Report 2025
52
Corporate Governance Statement
We have reviewed 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 by the UK Listing Rules.
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:
●
Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material
uncertainties identified set out on page 59;
●
Directors’ explanation as to its assessment of the Company’s prospects, the period this assessment covers and why the
period is appropriate set out on page 18;
●
Directors’ statement on whether it has a reasonable expectation that the Company will be able to continue in operation and
meet its liabilities set out on page 18;
●
Directors’ statement on fair, balanced and understandable set out on page 45;
●
Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on pages 17 and 18;
●
The section of the annual report that describes the review of effectiveness of risk management and internal control systems
set out on page 32; and;
●
The section describing the work of the Audit Committee set out on pages 34 and 35.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 45, 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
isa 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
inthe aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
Explanation as to what extent the audit was considered 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 irregularities, including fraud. The risk of not detecting a material misstatement due to
fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for
example, forgery or intentional misrepresentations, or through collusion. The extent to which our procedures are capable of
detecting irregularities, including fraud is detailed below.
However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of
the Company and management.
●
We obtained an understanding of the legal and regulatory frameworks that are applicable to the Company and determined
that the most significant are UK adopted international accounting standards, the Companies Act 2006, the UK Listing Rules,
the UK Corporate Governance Code, the Statement of Recommended Practice for the Financial Statements of Investment
Trust Companies as issued by the Association of Investment Companies, Section 1158 of the Corporation Tax Act 2010 and
The Companies (Miscellaneous Reporting) Regulations 2018.
Independent auditor’s report to the members
of The European Smaller Companies Trust PLC
(continued)
The European Smaller Companies Trust PLC Annual Report 2025
53
●
We understood how the Company is complying with those frameworks through discussions with the Audit Committee and
Company Secretary, review of Board and committee minutes and review of papers provided to the Audit Committee.
●
We assessed the susceptibility of the Company’s financial statements to material misstatement, including how fraud might
occur by considering the key risks impacting the financial statements. We identified a fraud risk with respect to the incomplete
or inaccurate revenue recognition through the incorrect classification of special dividends in the Statement of Comprehensive
Income. Further discussion of our approach is set out in the section on key audit matters above.
●
Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations.
Our procedures involved review of the reporting to the directors with respect to the application of the documented policies and
procedures and review of the financial statements to ensure compliance with the reporting requirements of the Company.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s
website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Other matters we are required to address
●
Following the recommendation from the Audit Committee, we were appointed by the Company in 2017 to audit the financial
statements for the year ending 30 June 2018 and subsequent financial periods.
●
The period of total uninterrupted engagement including previous renewals and reappointments is 8 years, covering the years
ending 30 June 2018 to 30 June 2025.
●
The audit opinion is consistent with the additional report to the Audit Committee.
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.
Mike Gaylor (Senior statutory auditor)
for and on behalf of Ernst & Young LLP
Statutory Auditor
London
20 October 2025
Independent auditor’s report to the members
of The European Smaller Companies Trust PLC
(continued)
The European Smaller Companies Trust PLC Annual Report 2025
54
Statement of ComprehensiveIncome
Year ended 30 June 2025 Year ended 30 June 2024
Note
Revenue
return
£’000
Capital
return
£’000
Total
return
£’000
Revenue
return
£’000
Capital
return
£’000
Tota l
return
£’000
2 Investment income 20,623 – 20,623 25,453 – 25,453
2 Other income 79 – 79 22 – 22
9
Gains on investments held
atfair value through profit
orloss – 82,027 82,027 – 72,040 72,040
Total income 20,702 82,027 102,729 25,475 72,040 97,515
Expenses
3 Management and
performance fee (813) (5,030) (5,843) (833) (3,902) (4,735)
4 Other operating expenses (1,789) – (1,789) (875) – (875)
Profit before finance costs
and taxation 18,100 76,997 95,097 23,767 68,138 91,905
5 Finance costs (698) (2,791) (3,489) (1,128) (4,512) (5,640)
Profit before taxation 17,402 74,206 91,608 22,639 63,626 86,265
6 Taxation (1,505) (46) (1,551) (977) (390) (1,367)
Profit for the year and total
comprehensive income 15,897 74,160 90,057 21,662 63,236 84,898
7 Return per ordinary share
– basic and diluted 4.24p 19.78p 24.02p 5.41p 15.81p 21.22p
The total column of this statement represents the Statement of Comprehensive Income, prepared in accordance with UK
adopted International Accounting Standards.
The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the
Association of Investment Companies.
The Company has no recognised gains or losses other than those recognised in the Statement of Comprehensive Income.
All revenue and capital items in this statement derive from continuing operations.
The notes on pages 59 to 76 form part of these financial statements
55
The European Smaller Companies Trust PLC Annual Report 2025
Statement of Changes in Equity
Year ended 30 June 2025
Note
Called up
share capital
£’000
Share
premium
account
£’000
Capital
redemption
reserve
£’000
Other capital
reserves
£’000
Revenue
reserve
£’000
Total
£’000
Total equity at 1 July 2024 6,208 120,364 14,020 621,976 36,026 798,594
Total comprehensive income:
Profit for the year – – – 74,160 15,897 90,057
14,16 Buyback of shares for cancellation (42) – 42 (4,720) – (4,720)
14,16 Buyback of shares for treasury – – – (1,848) – (1,848)
22
Tender offer – payments to
shareholders (1,803) – – (349,391) – (351,194)
22
Net movement in cash realisation
pool – – – 1,861 – 1,861
22 Tender offer – costs – – – (3,261) – (3,261)
Capital costs recoverable – – – 86 – 86
8 Ordinary dividends paid – – – – (18,898) (18,898)
Total equity at 30 June 2025 4,363 120,364 14,062 338,863 33,025 510,677
Year ended 30 June 2024
Note
Called up
share capital
£’000
Share
premium
account
£’000
Capital
redemption
reserve
£’000
Other capital
reserves
£’000
Revenue
reserve
£’000
Tota l
£’000
Total equity at 1 July 2023 6,264 120,364 13,964 564,880 33,170 738,642
Total comprehensive income:
Profit for the year – – – 63,236 21,662 84,898
14,16 Buyback of shares for cancellation (56) – 56 (6,140) – (6,140)
8 Ordinary dividends paid – – – – (18,806) (18,806)
Total equity at 30 June 2024 6,208 120,364 14,020 621,976 36,026 798,594
The notes on pages 59 to 76 form part of these financial statements
56
The European Smaller Companies Trust PLC Annual Report 2025
Balance Sheet
Note
At 30 June 2025
£’000
At 30 June 2024
£’000
Non current assets
9 Investments held at fair value through profit or loss 517,339 883,842
Current assets
11 Receivables 5,306 7,587
Cash and cash equivalents 1,396 232
6,702 7,819
Total assets 524,041 891,661
Current liabilities
12 Payables (5,182) (2,848)
Bank overdrafts (8,182) (90,219)
(13,364) (93,067)
Net assets 510,677 798,594
Equity attributable to equity shareholders
14 Called up share capital 4,363 6,208
15 Share premium account 120,364 120,364
16 Capital redemption reserve 14,062 14,020
Retained earnings:
16 Other capital reserves 338,863 621,976
17 Revenue reserve 33,025 36,026
18 Total equity 510,677 798,594
18
Net asset value per ordinary share - basic
anddiluted 224.45p 201.01p
The financial statements on pages 55 to 76 were approved and authorised for issue by the Board on 20 October 2025 and
signed on its behalf by:
Daniel Burgess
Chairman of the Audit Committee
The notes on pages 59 to 76 form part of these financial statements
57
The European Smaller Companies Trust PLC Annual Report 2025
Cash Flow Statement
Year ended
30June 2025
£’000
Year ended
30 June 2024
£’000
Operating activities
Profit before taxation 91,608 86,265
Add back: interest payable 3,489 5,640
Less: Gains on investments held at fair value through profit or loss (82,027) (72,040)
Sales of investments held at fair value through profit or loss 409,662 362,971
Purchases of investments held at fair value through profit or loss (312,211) (340,283)
Decrease/(increase) in prepayments and accrued income 1,010 (195)
Decrease in amounts due from brokers 1,459 291
Increase/(decrease) in accruals and deferred income 1,953 (7,622)
Net movement in cash realisation pool 1,861 –
Increase in amounts due to brokers 622 81
Transfer of assets in respect of the tender offer – Cash exit 107,486 –
Capital cost recoverable 86 –
Accrued costs on tender offer (950) –
Debtor for shareholder tender cancelled 34 –
Net cash inflow from operating activities before interest
andtaxation
1
224,082 35,108
Interest paid (3,893) (5,663)
Taxation on investment income (1,739) (1,726)
Net cash inflow from operating activities 218,450 27,719
Financing activities
Equity dividends paid (net of refund of unclaimed dividends –
seenote 8) (18,898) (18,806)
Buyback of shares for cancellation (4,720) (6,140)
Buyback of shares for treasury (1,685) –
Net repayment of bank overdraft (81,214) (2,543)
Tender offer – cash exit (108,455) –
Tender offer – in specie exit (3) –
Tender offer – costs (2,311) –
Net cash used in financing activities (217,286) (27,489)
Increase in cash and cash equivalents 1,164 230
Cash and cash equivalents at the start of the year 232 2
Cash and cash equivalents at the end of the year 1,396 232
Comprising:
Cash at bank 1,396 232
1,396 232
1 In accordance with IAS7.31 cash inflow from dividends was £21,779,000 (2024: £25,158,000) and cash inflow from interest was £11,000 (2024: £11,000)
The notes on pages 59 to 76 form part of these financial statements
58
The European Smaller Companies Trust PLC Annual Report 2025
Notes to the Financial Statements
1 Accounting policies
a) Basis of preparation
The European Smaller Companies Trust PLC is a Company incorporated in England and Wales and subject to the provisions
of the Companies Act 2006. The Company is domiciled in the United Kingdom. The financial statements for theyear ended
30 June 2025 have been prepared in accordance with UK adopted International Accounting Standards. These comprise
standards and interpretations approved by the International Accounting Board, together with interpretations of the
International Accounting Standards and Standing Interpretations Committee approved by the IFRS Interpretations
Committee that remain in effect, to the extent that IFRSs have been adopted by the UK Endorsement Board.
The financial statements have been prepared on a going concern basis. The principal accounting policies adopted are set
out below. Where presentational guidance set out in the Statement of Recommended Practice (‘SORP’) for investment
companies issued by the AIC in July 2022, is consistent with the requirements of UK adopted International Accounting
Standards, the directors have sought to prepare the financial statements on a basis consistent with the recommendations
of the SORP.
The financial position of the Company is described in the Strategic Report on pages 1 to 24. Note 13 to the financial
statements includes the Company’s policies and process for managing its capital; its financial risk management objectives;
and details of financial instruments and exposure to credit risk and liquidity risk. In preparing these financial statements the
directors have considered the impact of climate change risk and concluded there was no impact as the investments are
valued based on closing bid prices in active markets and thereby reflect participants’ views of climate change risk.
Accounting standards
i) The following new and amended standards are relevant and applicable to the Company and have been adopted although
they have no impact on the financial statements:
Standard
Effective for annual
periods beginning
on or after
IAS 1 Amendments Classification of Liabilities as Current or Non-Current 1 January 2024
IAS 1 Amendments Non-current Liabilities with Covenants 1 January 2024
ii) Relevant new standards, amendments and interpretations issued but not effective for the current financial year and not
early adopted by the Company:
Standard
Effective for annual
periods beginning
on or after
Annual Improvements 2023-24 Minor amendments to IFRS 1, 7, 9, 10, and IAS 7 1 January 2026
IFRS 18 Amendments Presentation and Disclosure in Financial Statements 1 January 2027
The directors expect the standards issued but not yet effective will have no material impact on the financial statements of
the Company in future periods.
b) Going concern
The directors have determined that it is appropriate to prepare the financial statements on a going concern basis and have
concluded that the Company has adequate resources to continue in operational existence for at least twelve months from
the date of approval of the financial statements.
In coming to this conclusion, the directors have considered the nature of the portfolio, being that the securities held are
readily realisable, the size and covenants of the Company’s bank overdraft and the strength of its distributable reserves.
Aspart of their usual assessment of risks facing the Company, the directors considered the macro-economic and
geopolitical environment, as well as the possible impact of climate change risk on the value of the portfolio. The directors
have concluded that the Company is able to meet its financial obligations, including the repayment of the bank overdraft,
as they fall due for a period of at least twelve months from the date of this report, being 20 October 2026.
59
The European Smaller Companies Trust PLC Annual Report 2025
Notes to the Financial Statements (continued)
1 Accounting policies (continued)
c) Investments held at fair value through profit or loss
All investments are held at fair value through profit or loss. Investment transactions are accounted for on a trade date basis.
Proceeds are measured at fair value, which are regarded as the proceeds of sale less any transaction costs. The fair value
of the financial instruments in the Balance Sheet is based on their closing bid price at the Balance Sheet date, without
deduction of the estimated future selling costs.
Changes in the fair value of investments held at fair value through profit or loss and gains and losses on disposal are
recognised in the Statement of Comprehensive Income as ‘Gains or losses on investments held at fair value through profit
or loss’. Also included within this caption are transaction costs in relation to the purchase or sale of investments.
d) Presentation of Statement of Comprehensive Income
In order to better reflect the activities of an investment trust company, and in accordance with guidance issued by the AIC,
supplementary information which analyses the Statement of Comprehensive Income between items of a revenue and
capital nature has been presented alongside the Statement of Comprehensive Income. Additionally, the net revenue is the
measure the directors believe appropriate in assessing the Company’s compliance with certain requirements set out in
s.1158 of the Corporation Tax Act 2010, for further information please refer to note 6 on page 64.
e) Income
Dividends receivable on equity shares are recognised as revenue for the year on an ex-dividend basis. Special dividends
are treated as revenue return or as capital return, depending on the facts of each individual case. Bank deposit interest is
accounted for on an accruals basis.
f) Expenses
All expenses and interest payable are accounted for on an accruals basis. On the basis of the Board’s expected long-term
split of total returns in the form of capital and revenue returns of 80% and 20%, respectively, the Company charges 80% of
its finance costs and management fees to capital. Any performance fees payable are allocated wholly to capital, reflecting
the fact that although they are calculated on a total return basis they are expected to be attributable largely, if not wholly, to
capital performance. Expenses which are incidental to the purchase or sale of an investment are charged to the capital
return column of the Statement of Comprehensive Income and allocated to the other capital reserves. All other operating
expenses are charged to the revenue return column of the Statement of Comprehensive Income.
g) Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on the taxable profit for the year. Taxable profit differs from net profit as reported in the
Statement of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in
other years and it further excludes items that are never taxable or deductible. The Company’s liability for current tax is
calculated using the effective tax rate of corporation tax for the accounting period.
In line with the recommendations of the SORP, the allocation method used to calculate tax relief on expenses presented
against capital returns in the supplementary information in the Statement of Comprehensive Income is the ‘marginal basis’.
Under this basis, if taxable income is capable of being offset entirely by expenses presented in the revenue return column
of the Statement of Comprehensive Income, then no tax relief is transferred to the capital return column.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is
accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available
against which deductible temporary differences can be utilised. Investment trusts which have approval as such under
s.1158 are not liable for taxation on capital gains.
The carrying amount of deferred tax assets is reviewed at each Balance Sheet date and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is
realised. Deferred tax is charged or credited in the Statement of Comprehensive Income, except when it relates to items
charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.
60
The European Smaller Companies Trust PLC Annual Report 2025
Notes to the Financial Statements (continued)
1 Accounting policies (continued)
h) Dividends
Dividends payable to shareholders are recognised in the financial statements when they are paid or, in the case of final
dividends, when they are approved by shareholders. Dividends are dealt with in the Statement of Changes in Equity.
Following the change to the Company’s articles of association with effect from 21 November 2016 dividends may be
paidfrom the revenue reserve or realised capital profits (‘the capital reserve arising on investments sold’).
i) Foreign currency
For the purposes of the financial statements, the results and financial position are expressed in pounds sterling, which is
the functional and the presentational currency of the Company. Sterling is the functional currency because it is the currency
of the primary economic environment in which the Company operates.
Transactions recorded in overseas currencies during the year are translated into sterling at the appropriate daily exchange
rates. Monetary assets and liabilities and equity investments held at fair value through profit or loss that are denominated
inoverseas currencies at the Balance Sheet Date are translated into sterling at the exchange rates ruling at that date.
Exchange gains and losses on investments held at fair value through profit or loss are included within ‘Gains on
investments held at fair value though profit or loss’.
j) Cash and cash equivalents
Cash comprises cash in hand and demand deposits. In the Cash Flow Statement, cash and cash equivalents includes
cash in hand and deposits held at call with banks. In the Balance Sheet, bank overdrafts are not included in cash and cash
equivalents, but are disclosed within current liabilities. All cash at the year end was held at banks and there were no cash
equivalents (2024: same).
k) Bank borrowings
Interest bearing bank loans and overdrafts are recorded initially at fair value, being the proceeds received, net of direct
issue costs. They are subsequently measured at amortised cost. Finance costs, including premiums payable on settlement
or redemption and direct issue costs, are accounted for on an accruals basis in the Statement of Comprehensive Income
using the effective interest rate method and are added to the carrying amount of the instrument to the extent that they are
not settled in the period in which they arise.
l) Receivables
Receivables are amounts due from securities sold for future settlement, withholding tax recoverable, prepayments and
accrued income in the ordinary course of business. If collection is expected in one year or less they are classified as
current assets. If not, they are presented as non-current assets. Receivables are recognised initially at fair value and
subsequently measured at amortised cost.
m) Payables
Payables are obligations to pay for securities purchased for future settlement, accruals and deferred income that have
been acquired/incurred in the ordinary course of business. Accounts payable are classified as current liabilities if payment
is due within one year or less. If not, they are presented as non-current liabilities. Payables are recognised initially at fair
value and subsequently measured at amortised cost.
n) Repurchase of ordinary shares
The costs of repurchasing ordinary shares, including related stamp duty and transaction costs, are taken directly to equity
and dealt with in the Statement of Changes in Equity. Share repurchase transactions are accounted for on a trade date
basis. The nominal value of ordinary share capital repurchased and cancelled is transferred out of called up share capital
and into the capital redemption reserve.
61
The European Smaller Companies Trust PLC Annual Report 2025
Notes to the Financial Statements (continued)
1 Accounting policies (continued)
o) Capital reserves
Other Capital reserves
Capital reserve arising on investments sold
The following are accounted for in this reserve:
●
gains and losses on the disposals of investments;
●
expenses and finance costs allocated to capital net of tax relief;
●
realised foreign exchange differences of a capital nature; and
●
costs of repurchasing ordinary share capital.
Capital reserve arising on revaluation of investments held
The following are accounted for in this reserve:
●
increases and decreases in the valuation of investments held at the year end; and
●
unrealised foreign exchange differences of a capital nature.
Revenue reserve
The revenue reserve represents accumulated revenue profits retained by the Company that have not currently been
distributed to shareholders as a dividend.
Capital redemption reserve
The capital redemption reserve represents the nominal value of ordinary shares repurchased and cancelled.
Share capital
Share capital represents the nominal value of ordinary shares issued.
Share premium
The share premium account represents the premium above nominal value received by the Company on issuing shares net
of issue costs.
p) Distributable reserves
The Company’s capital reserve arising on investments sold of £236,305,000 (2024: £519,340,000) and revenue reserve of
£33,025,000 (2024: £36,026,000) may be distributed by way of a dividend.
q) Key estimates and assumptions
The key estimates and assumptions are based on historical experience and various other factors that are believed to be
reasonable under the circumstances. It also requires management to exercise judgment in the process of applying the
Company’s accounting policies. There are no estimates and assumptions that may cause material adjustment to the
carrying value of assets and liabilities. The decision to allocate special dividends as income or capital is a judgement, but
isnot considered a significant judgement on a materiality basis.
r) Operating segments
Under IFRS 8, operating segments are considered to be components of an entity about which separate financial
information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate
resources and in assessing performance. The directors meet regularly to consider investment strategy and monitor the
Company’s performance. The Fund Manager, who has been designated by the investment manager to manage the
Company’s investments, attends all Board meetings at which investment strategy and performance are discussed.
Thedirectors consider that the Company has one operating segment, being the activity of investing in shares and
securities primarily forcapital appreciation in accordance with the Company’s published investment objective.
62
The European Smaller Companies Trust PLC Annual Report 2025
Notes to the Financial Statements (continued)
2 a) Investment income
2025
£’000
2024
£’000
UK dividend income from listed investments 850 75
Overseas dividend income from listed investments 19,773 25,249
Stock dividends from listed investments – 129
20,623 25,453
All overseas dividend income is derived from investments in Continental Europe.
b) Other income
2025
£’000
2024
£’000
Bank interest 57 12
Interest received on withholding tax refund 22 10
79 22
3 Management and performance fees
2025 2024
Revenue
return
£’000
Capital
return
£’000
Total
return
£’000
Revenue
return
£’000
Capital
return
£’000
Tota l
return
£’000
Management fee 813 3,252 4,065 833 3,333 4,166
Performance fee – 1,778 1,778 – 569 569
Total 813 5,030 5,843 833 3,902 4,735
A summary of the terms of the management agreement is given on page 16 and in note 20 on page 75.
4 Other operating expenses
2025
£’000
2024
£’000
Auditor’s remuneration¹ 61 55
Directors’ fees and expenses
2
200 185
Other expenses payable to the management company
3
167 70
Custody fees 217 239
Depositary charges 46 48
Printing 9 24
Advisory and consultancy fees 99 101
Requisitioned general meeting costs 799 –
Other expenses 191 153
1,789 875
Expenses are net of VAT
1 The auditor has not undertaken any non-audit services in either period
2 Directors fees and expenses are related party transactions, more detail can be found in note 20. A breakdown of directors fees and expenses can be
found in the Directors’ Remuneration Report
3 Other expenses comprise fees payable to the investment manager which relate to marketing activities. More detail can be found in note 20
63
The European Smaller Companies Trust PLC Annual Report 2025
Notes to the Financial Statements (continued)
5 Finance costs
2025 2024
Revenue
return
£’000
Capital
return
£’000
Total
return
£’000
Revenue
return
£’000
Capital
return
£’000
Tota l
return
£’000
Bank overdraft interest 698 2,791 3,489 1,128 4,512 5,640
6 Ta xation
a) Analysis of charge in year
2025 2024
Revenue
return
£’000
Capital
return
£’000
Total
return
£’000
Revenue
return
£’000
Capital
return
£’000
Tota l
return
£’000
Foreign withholding taxes 2,405 46 2,451 3,207 390 3,597
Overseas tax reclaimable (900) – (900) (2,230) – (2,230)
Total current tax for the year (see note 6b) 1,505 46 1,551 977 390 1,367
b) Factors affecting tax charge for the year
The tax assessed for the year ended 30 June 2025 is lower than the standard rate of corporation tax of 25% (2024: 25%).
2025 2024
Revenue
return
£’000
Capital
return
£’000
Total
return
£’000
Revenue
return
£’000
Capital
return
£’000
Tota l
return
£’000
Net profit on ordinary activities before taxation 17,402 74,206 91,608 22,639 63,626 86,265
Corporation tax at standard rate of 25% (2024: standard
rate of 25%) 4,351 18,552 22,903 5,660 15,906 21,566
Effects of:
Gains on investments held not taxable – (20,507) (20,507) – (18,010) (18,010)
Expenses not deductible for tax purposes – – – 1 – 1
Corporate Interest Restriction 72 286 358 181 726 907
Expenses unutilised for tax purposes 610 1,669 2,279 219 1,378 1,597
Non-taxable dividends (5,033) – (5,033) (6,061) – (6,061)
Overseas tax 1,505 46 1,551 977 390 1,367
Tax charge 1,505 46 1,551 977 390 1,367
c) Provision for deferred taxation
No provision for deferred taxation has been made in the current year or in the prior year. Due to the Company’s tax status
as an investment trust and the intention to continue meeting the conditions required to maintain approval of such status in
the foreseeable future, the Company has not provided deferred tax on any capital gains arising on the revaluation or
disposal of investments.
d) Factors that may affect future tax charges
The Company can offset management fees, performance fees and other administrative expenses and interest costs
against taxable income to eliminate any tax charge on such income. The tax legislation refers to these as management
expenses (management fees, performance fees and other administrative expenses) and non-trade loan relationship deficits
(interest costs) and these are captured together under the heading ‘Expenses unutilised for tax purposes’ in the table
above. Where these are not fully utilised, they can be carried forward to future years. As the Company is unlikely to
generate future taxable profits to utilise these amounts, the Company cannot recognise an asset to reflect them, but must
still disclose the deferred tax amount carried forward arising from any unutilised amounts.
64
The European Smaller Companies Trust PLC Annual Report 2025
Notes to the Financial Statements (continued)
6 Taxation (continued)
d) Factors that may affect future tax charges (continued)
Consequently, the Company has not recognised a deferred tax asset totalling £23,625,000 (2024: £21,330,000) arising as
aresult of having unutilised management expenses and unutilised non-trade loan relationship deficits totalling £94,561,000
(2024: £85,321,000), and based on a prospective tax rate of 25% (2024: 25%). These expenses will only be utilised, to any
material extent, if changes are made either to the tax treatment of the capital gains made by investment trusts or to the
Company’s investment profile which require them to be used.
7 Return per ordinary share
The return per ordinary share figure is based on the net profit for the year of £90,057,000 (2024: profit £84,898,000) and
onthe weighted average number of ordinary shares in issue during the year of 374,911,120 (2024: 400,039,178).
The return per ordinary share figure detailed above can be further analysed between revenue and capital, as below.
TheCompany has no securities in issue that could dilute the return per ordinary share. Therefore the basic and diluted
return per ordinary share are the same (2024: same).
2025
£’000
2024
£’000
Net revenue profit 15,897 21,662
Net capital profit 74,160 63,236
Net profit 90,057 84,898
Weighted average number of ordinary shares in issue during the year 374,911,120 400,039,178
2025
Pence
2024
Pence
Revenue return per ordinary share 4.24 5.41
Capital return per ordinary share 19.78 15.81
Total return per ordinary share 24.02 21.22
8 Dividends
2025
£’000
2024
£’000
Amounts recognised as distributions to equity holders in the year:
Final dividend of 3.35p for the year ended 30 June 2024 (2023: 3.25p) 13,193 13,010
Interim dividend of 1.45p per ordinary share for the year ended 30 June 2025
(2024:1.45p) 5,710 5,796
Unclaimed dividends from prior years (5) –
18,898 18,806
The final dividend of 3.35p per ordinary share in respect of the year ended 30 June 2024 was paid on 29 November 2024
to shareholders on the Register of Members at the close of business on 1 November 2024. The total dividend paid
amounted to £13,193,000.
The second interim dividend in the amount of 3.45p per share for the year ended 30 June 2025, which was declared on
9September 2025, has not been included as a liability in these financial statements. Under UK adopted International
Accounting Standards, interim dividends are not recognised until paid. In previous years, under the same standards, final
dividends are not recognised until approved by shareholders.
.
65
The European Smaller Companies Trust PLC Annual Report 2025
Notes to the Financial Statements (continued)
8 Dividends (continued)
The total dividends payable in respect of the financial year which form the basis of the test under s.1158 are set out below:
2025
£’000
2024
£’000
Revenue available for distribution by way of dividends for the year 15,897 21,662
Interim dividend of 1.45p per ordinary share for the year ended 30 June 2025
(2024:1.45p) (5,710) (5,796)
Second interim dividend for the year ended 30 June 2025 – 3.45p
(based on 227,524,156 shares in issue at 9 September 2025) (7,850) –
Final dividend for the year ended 30 June 2024 – 3.35p (2023: 3.25p)
(based on 394,459,292 shares in issue at 9 October 2024) – (13,214)
Transfer to Revenue reserve 2,337 2,652
The Company’s undistributed revenue represents 11.3% (2024: 10.4%) of total income.
9 Investments held at fair value through profit or loss
2025
£’000
2024
£’000
Valuation at 1 July 883,842 835,744
Investment holding gains at 1 July (102,636) (68,291)
Cost at 1 July 781,206 767,453
Purchases at cost 312,211 340,283
Sales at cost (384,971) (326,530)
Sales of investments at cost in respect of the tender offer – In specie (203,545) –
Sales of investments at cost in respect of the tender offer – Cash exit (90,120) –
Cost at 30 June 414,781 781,206
Investment holding gains at 30 June 102,558 102,636
Valuation of investments at 30 June 517,339 883,842
The Company received £409,662,000 (2024: £362,971,000) from investments sold in the year. The book cost of these
investments when they were purchased were £384,971,000 (2024: £326,530,000). These investments have been revalued
over time and until they were sold any unrealised gains/losses were included in the fair value of the investments.
Following the calculation date in respect of the tender offer on 19 May 2025, investments valued at £242,770,000, with a
book cost when purchased of £203,545,000, were transferred to shareholders who elected for the in specie option.
Additionally, £107,486,000, with a book cost when purchased of £90,120,000, were allocated to shareholders who opted
for the cash exit option, and these shares were ultimately sold. For further details see note 22.
Total capital gains/(losses) from investments
2025
£’000
2024
£’000
Realised gains based on historical cost 81,282 36,441
Less revaluation losses recognised in previous years 59,372 21,660
Gains on investments sold in year on carrying value at the previous
Balance Sheet date 140,654 58,101
Revaluation of investments held at 30 June (59,450) 12,685
Exchange gains 823 1,254
Total 82,027 72,040
66
The European Smaller Companies Trust PLC Annual Report 2025
Notes to the Financial Statements (continued)
10 Substantial interests
The Company holds an interest of 3.2% in Bike24, with a market valuation of £2,991,000.
11 Receivables
2025
£’000
2024
£’000
Securities sold for future settlement 273 1,732
Withholding tax recoverable 4,437 4,330
Prepayments and accrued income 596 1,525
5,306 7,587
12 Payables
2025
£’000
2024
£’000
Securities purchased for future settlement 1,167 545
Buyback of shares into treasury for future settlement 162 –
Accruals and deferred income 3,853 2,303
5,182 2,848
13 Risk management policies and procedures
As an investment trust the Company invests in equities and other investments for the long term so as to secure its
investment objectives as stated in the Strategic Report. In pursuing its investment objective, the Company is exposed to
avariety of financial risks that could result in either a reduction in net assets or a reduction in the profits available for
distribution by way of dividends.
These financial risks: market risk (comprising market price risk, currency risk and interest rate risk), liquidity risk and credit
risk, and the directors’ approach to the management of these risks, are set out below. The Board and the investment
manager co-ordinate the Company’s risk management and there are various risk management systems in place.
The Board determines the objectives, policies and processes for managing risks, and these are set out below under the
relevant risk category. The policies for the management of risk have not changed from the previous accounting period.
13.1 Market risk
The fair value of a financial instrument held by the Company may fluctuate due to changes in market prices. Market
riskcomprises market price risk (see note 13.1.1), currency risk (see note 13.1.2) and interest rate risk (see note 13.1.3).
Theinvestment manager assesses the exposure to market risk when making each investment decision and monitors
theoverall level of market risk on the whole of the investment portfolio on an ongoing basis.
13.1.1 Market price risk
Market price risks (i.e. changes in market prices other than those arising from interest rate risk or currency risk) may affect
the fair value of the investments.
Management of the risk
The Board manages the risks inherent in the investment portfolio by ensuring full and timely reporting of relevant
information from the investment manager. Investment performance is reviewed at each Board meeting. The Board monitors
the investment manager’s compliance with the Company’s mandate.
The Company’s exposure to changes in market prices on equity investments was £517,339,000 (2024: £883,842,000).
67
The European Smaller Companies Trust PLC Annual Report 2025
Notes to the Financial Statements (continued)
13 Risk management policies and procedures (continued)
13.1.1 Market price risk (continued)
Concentration of exposure to market price risk
A geographical analysis of the Company’s investment portfolio is shown on page 11.
Market price risk sensitivity
The sensitivity of (a) the return after taxation for the year and (b) the Company’s net assets to an increase or decrease of
20% in the fair values of the Company’s investments at each Balance Sheet date is given below. This level of change is
considered to be reasonably possible, based on observation of current market conditions.
The impact of a 20% increase in the value of the investments on the revenue return as at 30 June 2025 is a decrease of
£103,000 (2024: £177,000) and on the capital return is an increase of £103,054,000 (2024: £176,061,000). Accordingly,
theimpact on total profit after tax and the year end net assets is an increase of £102,950,000 (2024: £175,885,000).
The impact of a 20% decrease in the value of the investments on the revenue return as at 30 June 2025 is an increase of
£103,000 (2024: £177,000) and on the capital return is a decrease of £103,054,000 (2024: £176,061,000). Accordingly,
theimpact on total profit after tax and the year end net assets is a decrease of £102,950,000 (2024: £175,885,000).
13.1.2 Currency risk
A proportion of the Company’s assets, liabilities, income and expenses are denominated in currencies other than sterling
(the Company’s functional and presentational currency). As a result, movements in exchange rates may affect the sterling
value of those items.
Management of the risk
The investment manager monitors the Company’s exposure to foreign currencies on a daily basis and reports to the Board
at each Board meeting. The investment manager measures the risk to the Company of the foreign currency exposure by
considering the effect on the Company’s NAV and total return of a movement in the exchange rate to which the Company’s
assets, liabilities, income and expenses are exposed. The Company does not hedge its foreign currency exposure.
Foreign currency borrowing and financial instruments may be used to limit the Company’s exposure to future changes in
exchange rates which might otherwise adversely affect the value of the portfolio of investments. Borrowings are limited to
30% of NAV.
Investment income denominated in foreign currencies is converted into sterling on receipt. The Company does not use
financial instruments to mitigate the currency exposure in the period between the time that income is included in the
financial statements and its receipt.
Foreign currency exposure
The fair values of the Company’s monetary items that have foreign currency exposure at the year end are shown below.
Where the Company’s equity investments (which are not monetary items) are denominated in a foreign currency, they have
been included separately in the analysis so as to show the overall level of exposure.
2025
Euro
£’000
Swedish
krona
£’000
Swiss
franc
£’000
Other
£’000
Receivables (securities sold for future settlement, dividends and other
income receivable) 3,549 17 1,243 261
Payables (securities purchased for future settlement, accruals and
other payables) (530) (523) – (114)
Bank overdrafts (8,182) – – –
Total foreign currency exposure on net monetary items (5,163) (506) 1,243 147
Investments 354,553 70,887 45,379 35,915
Total net foreign currency exposure 349,390 70,381 46,622 36,062
68
The European Smaller Companies Trust PLC Annual Report 2025
Notes to the Financial Statements (continued)
13 Risk management policies and procedures (continued)
13.1.2 Currency risk (continued)
2024
Euro
£’000
Swedish
krona
£’000
Swiss
franc
£’000
Other
£’000
Receivables (securities sold for future settlement, dividends and other
income receivable) 5,764 17 1,286 346
Payables (securities purchased for future settlement, accruals and
otherpayables) (545) – – –
Bank overdrafts (90,219) – – –
Total foreign currency exposure on net monetary items (85,000) 17 1,286 346
Investments 601,533 96,818 72,624 80,992
Total net foreign currency exposure 516,533 96,835 73,910 81,338
The above amounts are not representative of the exposure to risk during each year, as levels of monetary foreign currency
exposure change significantly throughout the year.
Foreign currency sensitivity
The following tables illustrate the sensitivity of the total profit after tax for the year and the net assets in regard to
movements in the Company’s foreign currency financial assets and financial liabilities caused by changes in the exchange
rates for the euro/sterling, Swedish krona/sterling, Swiss franc/sterling and other/sterling.
A 10% (2024: 10%) movement is assumed for all currencies.
These percentages are deemed reasonable based on the average market volatility in exchange rates. The sensitivity
analysis is based on the Company’s foreign currency financial assets and financial liabilities held at each Balance
Sheetdate.
The impact on the total profit after tax and the year end net assets of a depreciation in the year end exchange rate for
sterling against the currencies shown would have been as follows:
2025 2024
Euro
£’000
Swedish
krona
£’000
Swiss
franc
£’000
Other
£’000
Euro
£’000
Swedish
krona
£’000
Swiss
franc
£’000
Other
£’000
Profit after tax
Revenue return 1,314 117 144 106 1,926 112 93 124
Capital return 40,405 7,844 5,021 3,975 65,752 10,714 9,336 8,473
Change to profit after tax for
the year 41,719 7,961 5,165 4,081 67,678 10,826 9,429 8,597
Impact on net assets 41,719 7,961 5,165 4,081 67,678 10,826 9,429 8,597
The impact on the total profit after tax and the year end net assets of an appreciation in the year end exchange rate for
sterling against the currencies shown would have been as follows:
2025 2024
Euro
£’000
Swedish
krona
£’000
Swiss
franc
£’000
Other
£’000
Euro
£’000
Swedish
krona
£’000
Swiss
franc
£’000
Other
£’000
Profit after tax
Revenue return (1,191) (97) (118) (86) (1,614) (94) (75) (101)
Capital return (33,058) (6,418) (4,108) (3,252) (53,187) (7,971) (7,638) (6,933)
Change to profit after tax for
the year (34,249) (6,515) (4,226) (3,338) (54,801) (8,065) (7,713) (7,034)
Impact on net assets (34,249) (6,515) (4,226) (3,338) (54,801) (8,065) (7,713) (7,034)
The above amounts are not representative of the exposure to risk during the year, although levels of monetary foreign
currency exposure in each currency will change as investments are bought and sold in the portfolio during the year.
69
The European Smaller Companies Trust PLC Annual Report 2025
Notes to the Financial Statements (continued)
13 Risk management policies and procedures (continued)
13.1.3 Interest rate risk
Interest rate movements may affect the level of interest receivable from cash and cash equivalents and the interest payable
on the Company’s short term borrowings. Interest rate changes may also have an impact on the market value of the
Company’s equity investments. In particular, the effect of interest rate changes on the earnings of companies held within
the portfolio may have a significant impact on the valuations of those companies.
Management of the risk
The Company finances part of its activities through borrowings at levels approved and monitored by the Board. Derivative
contracts are not used to hedge against the exposure to interest rate risk.
Interest rate exposure
The exposure of financial assets and liabilities to floating interest rate risk can be found on the Balance Sheet under the
headings ‘Cash and cash equivalents’ and ‘Bank overdrafts’. These amounts are not necessarily representative of the
exposure to interest rates during the year as the level of exposure changes as investments are made, borrowings are
drawn down and repaid. The Company does not have any fixed interest rate exposure. Interest received on cash balances
or paid on the bank overdraft is at a margin over the applicable base rate (2024: same).
Interest rate sensitivity
The impact on the total profit after tax and the year end net assets of an increase or decrease of 100 basis points
(2024:100 basis points) in interest rates would have been as follows:
Statement of Comprehensive Income
Increase
in rates
2025
£’000
Decrease
in rates
2025
£’000
Increase
in rates
2024
£’000
Decrease
in rates
2024
£’000
Profit after tax
Revenue return (2) 2 (178) 178
Capital return (66) 66 (722) 722
Change to net profit and net assets (68) 68 (900) 900
This level of change is considered to be reasonable based on current market conditions.
In the opinion of the directors, these sensitivity analyses are not representative of the year as a whole since exposure
changes as investments are made and borrowings are drawn down or repaid throughout the year.
13.2 Liquidity risk
This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities.
Management of the risk
Liquidity risk is not significant as the majority of the Company’s assets are investments in listed securities that are readily
realisable. During the year the Company had a secured multi-currency overdraft facility equal to the lesser of £160,000,000
(2024: £160,000,000) and 25% (2024: 25%) of custody assets with HSBC Bank plc, the Company’s depositary and
custodian. Interest on the overdraft is charged at the aggregate of 1.25% and the base rate.
The amount drawn down at 30 June 2025 was £8,182,000 (2024: £90,219,000) in Euros (2024: Euros).
The Board gives guidance to the investment manager as to the maximum amount of the Company’s resources that
shouldbe invested in any one company. The policy is that the Company should generally remain fully invested and that
currently short term borrowings are being used for gearing and financing, but it may also be used to manage short term
cash requirements.
70
The European Smaller Companies Trust PLC Annual Report 2025
Notes to the Financial Statements (continued)
13 Risk management policies and procedures (continued)
13.2 Liquidity risk (continued)
Liquidity risk exposure
The remaining contractual maturities of the financial liabilities at the year end, based on the earliest date on which payment
can be required, was as follows:
2025 2024
3 months
or less
£’000
Total
£’000
3 months
or less
£’000
Tota l
£’000
Current liabilities:
Borrowings under the overdraft facility 8,182 8,182 90,219 90,219
Amounts due in relation to securities purchased for future settlement
and accruals 5,182 5,182 2,848 2,848
13,364 13,364 93,067 93,067
The Company’s cash balances are offset against its borrowings under the overdraft facility for the purposes of monitoring
the level of borrowing within the overdraft limit.
13.3 Credit risk
The failure of the counterparty to a transaction to discharge its obligations under that transaction could result in the
Company suffering a loss.
Management of the risk
Credit risk is managed as follows:
●
investment transactions are carried out with a large number of approved brokers, whose credit standard is reviewed
periodically by the investment manager, and limits are set on the amount that may be due from any one broker; and
●
cash is held only with the custodian/depositary or reputable banks. The entity with which cash is held is subject to
continual review. .
None of the Company’s financial assets or liabilities are secured by collateral or other credit enhancements.
Outstanding settlements are subject to credit risk. Credit risk is mitigated by the Company through its decision to transact
with counterparties of high credit quality. The Company only buys and sells investments through brokers which are
approved counterparties, thus minimising the risk of default during settlement. The credit ratings of brokers are reviewed
periodically by the investment manager and limits are set on the amount that may be due from any one broker.
The Company is also exposed to credit risk through the use of banks for its cash position. Bankruptcy or insolvency of
banks may cause the Company’s rights with respect to cash held by banks to be delayed or limited. The Company’s cash
balances are held by the custodian, HSBC Bank plc. The directors believe this counterparty is of high credit quality;
therefore the Company has minimal exposure to credit risk.
Credit risk exposure
The table below summarises the maximum credit risk exposure of the Company as at the year end:
2025
£’000
2024
£’000
Receivables:
Securities sold for future settlement 273 1,732
Accrued income 386 1,461
Cash and cash equivalents 1,396 232
2,055 3,425
71
The European Smaller Companies Trust PLC Annual Report 2025
Notes to the Financial Statements (continued)
13 Risk management policies and procedures (continued)
13.4 Fair values of financial assets and financial liabilities
Financial assets and financial liabilities are either carried in the Balance Sheet at their fair value (investments) or their
carrying amount is a reasonable approximation of fair value due to their short term to maturity (amounts due from securities
sold for future settlement, dividends and amounts related to securities purchased for future settlement, accruals, cash and
cash equivalents and bank overdrafts).
13.5 Fair value hierarchy disclosures
The table below sets out the fair value measurements using the IFRS 13 fair value hierarchy.
Categorisation within the hierarchy has been determined on the basis of the lowest level of input that is significant to the fair
value measurement of the relevant asset as follows:
Level 1 – valued using quoted prices in active markets for identical assets.
Level 2 – valued by reference to valuation techniques using observable inputs other than quoted prices included within Level 1.
Level 3 – valued by reference to valuation techniques using inputs that are not based on observable market data.
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
Equity Investments
2025 517,339 – – 517,339
2024 883,842 – – 883,842
13.6 Capital management policies and procedures
The Company’s capital management objectives are:
●
to ensure that it will be able to continue as a going concern; and
●
to maximise the income and capital return to its equity shareholders through an appropriate balance of equity capital
and debt.
The Company’s capital at 30 June 2025 comprised its equity share capital, reserves and debt that are shown in the
Company Balance Sheet at a total of £518,859,000 (2024: £888,813,000).
The Board, with assistance of the investment manager, monitors and reviews the broad structure of the Company’s capital
on an ongoing basis. This review includes:
●
the need to buy back equity shares for cancellation or to hold in treasury, which takes account of the difference
between the NAV per share and the share price (i.e. the level of share price discount or premium);
●
the need for new issues of equity shares;
●
the extent to which revenue in excess of that which is required to be distributed should be retained.
The Company’s policies and processes for managing capital are unchanged from the preceding accounting period.
The Company is subject to the following externally imposed capital requirements:
●
as a public company, the Company has a minimum share capital of £50,000;
●
in order to be able to pay dividends out of profits available for distribution by way of dividends, the Company has to be
able to meet one of the two capital restriction tests imposed on investment companies by law; and
●
borrowings under the overdraft facility are not to exceed the lower of £160,000,000 or 25% of the custody assets.
These requirements are unchanged since last year, and the Company has complied with them.
72
The European Smaller Companies Trust PLC Annual Report 2025
Notes to the Financial Statements (continued)
14 Called up share capital
Shares entitled
to dividend
Shares held
in Treasury
Total shares
in issue
Nominal value of
shares in issue
£’000
Allotted, issued and fully paid
Issued ordinary shares of 1.5625p each
At 1 July 2024 397,287,598 – 397,287,598 6,208
Buyback of shares for cancellation (2,655,272) – (2,655,272) (42)
Buyback of shares for treasury (1,011,095) 1,011,095 – –
Tender offer (166,097,075) 50,710,953 (115,386,122) (1,803)
At 30 June 2025 227,524,156 51,722,048 279,246,204 4,363
Allotted, issued and fully paid
Issued ordinary shares of 1.5625p each
At 1 July 2023 400,867,176 – 400,867,176 6,264
Buyback of shares for cancellation (3,579,578) – (3,579,578) (56)
At 30 June 2024 397,287,598 – 397,287,598 6,208
During the year the Company repurchased 2,655,272 of its own issued ordinary shares for cancellation (2024: 3,579,578)
ata cost of £4,720,000 (2024: £6,140,000) and repurchased 1,011,095 ordinary shares for treasury (2024: nil), at a cost of
£1,848,000 (2024: nil). Since the year end and as at 17 October 2025, being the latest practicable date before publication,
the Company had bought back 11,628 ordinary shares for holding in treasury, at a cost of £24,000 (gross of commission).
On 15 April 2025, the Company announced a tender offer to buy back up to 42.5% of the ordinary share capital and
eligible shareholders were given the option to continue investing or exit the Company, selecting either a cash exit option
orin specie consideration option.
A total of 166,097,075 ordinary shares were tendered, which represented 42.2% of ordinary shares in issue. Shareholders
holding 50,710,953 ordinary shares elected for the cash exit option and shareholders holding 115,386,122 ordinary shares
elected for the in specie consideration option. See note 22 for further detail.
15 Share premium account
2025
£’000
2024
£’000
At 1 July and 30 June 120,364 120,364
73
The European Smaller Companies Trust PLC Annual Report 2025
Notes to the Financial Statements (continued)
16 Capital redemption reserve and other capital reserves
2025
Capital
redemption reserve
£’000
Capital reserve
arising on revaluation
of investments held
£’000
Capital reserve
arising on
investments sold
£’000
Total other capital
reserves
£’000
At 1 July 2024 14,020 102,636 519,340 621,976
Transfer on disposal of investments
(see note 9) – 59,372 (59,372) –
Capital (losses)/gains for the year – (59,450) 140,654 81,204
Expenses, finance costs and taxation
charged to capital – – (7,867) (7,867)
Net gain on foreign exchange – – 823 823
Buyback of shares for cancellation 42 – (4,720) (4,720)
Buyback of shares for treasury – – (1,848) (1,848)
Tender offer – – (350,791) (350,791)
Capital costs recoverable – – 86 86
At 30 June 2025 14,062 102,558 236,305 338,863
2024
Capital
redemption reserve
£’000
Other capital reserve
arising on revaluation
of investments held
£’000
Other capital
reserve arising on
investments sold
£’000
Total other
capital reserves
£’000
At 1 July 2023 13,964 68,291 496,589 564,880
Transfer on disposal of investments
(see note 9) – 21,660 (21,660) –
Capital gains for the year – 12,685 58,101 70,786
Expenses, finance costs and taxation
charged to capital – – (8,804) (8,804)
Net gain on foreign exchange – – 1,254 1,254
Buyback of shares for cancellation 56 – (6,140) (6,140)
At 30 June 2024 14,020 102,636 519,340 621,976
17 Retained earnings – revenue reserve
2025
£’000
2024
£’000
At 1 July 36,026 33,170
Ordinary dividends paid (18,898) (18,806)
Revenue return for the year 15,897 21,662
At 30 June 33,025 36,026
74
The European Smaller Companies Trust PLC Annual Report 2025
Notes to the Financial Statements (continued)
18 Net asset value per ordinary share
The NAV per ordinary share is based on the net assets attributable to the ordinary shares of £510,677,000 (2024:
£798,594,000) and on the 227,524,156 ordinary shares in issue at 30 June 2025 (2024: 397,287,598).
The Company has no securities in issue that could dilute the NAV per ordinary share (2024: same). The NAV per ordinary
share at 30 June 2025 was 224.45p (2024: 201.01p).
The movements during the year in assets attributable to the ordinary shares were as follows:
2025
£’000
2024
£’000
Net assets attributable to ordinary shares at start of year 798,594 738,642
Profit for the year 90,057 84,898
Dividends paid in the year (18,898) (18,806)
Buyback of shares for cancellation (4,720) (6,140)
Buyback of shares for treasury (1,848) –
Tender offer – reduction in nominal value of share capital (1,803) –
Tender offer – balance of payment to shareholders (350,791) –
Capital costs recoverable 86 –
Net assets at 30 June 510,677 798,594
19 Capital commitments and contingent liabilities
There were no capital commitments or contingent liabilities as at 30 June 2025 (2024: same).
20 Transactions with the investment manager and related parties
Under the terms of an agreement effective from 22 July 2014 and most recently updated in 2024, the Company has
appointed Janus Henderson Investors to provide investment management, accounting, administration and company
secretarial services. JHI has contracted with BNP Paribas to provide accounting and administration services.
The base management fee is 0.55% per annum of net assets up to £800m and 0.45% per annum thereafter. On
completion of the combination with EAT, the first tier of the management fee reduced to 0.50% p.a. of net assets up to
£800m. A performance fee of 15% of the positive difference between the average annual NAV total return and the average
annual total return of the benchmark may be payable. Performance of the Company and the benchmark is measured on a
NAV total return (with gross income reinvested) basis and is measured over a rolling three-year period. The management
fee and performance fee are capped at 2.0% of the NAV at the last day of the relevant period and a hurdle of 1.0% must be
reached before any performance fee can be earned. The total of the management fee paid or payable to the investment
manager under the management agreement in respect of the year ended 30 June 2025 was £4,065,000 (2024:
£4,166,000), of which £938,000 was outstanding at 30 June 2025 (2024: £1,098,000). A performance fee of £1,778,000
(2024: £569,000) in respect of the year ended 30 June 2025 is payable to the investment manager.
In addition to the above services, the investment manager facilitates marketing activities with third-parties which are
recharged to the Company. The total fees paid or payable for these services for the year ended 30 June 2025 amounted to
£167,000 excluding VAT (2024: £70,000), of which £nil was outstanding at 30 June 2025 (2024: £30,000).
The compensation payable to key management personnel in respect of short term employment benefits was £185,000.
This disclosure relates wholly to the fees of £185,000 payable to the directors in respect of the year (2024: £183,000); the
directors are all non-executive and receive no other compensation. The Directors’ Remuneration Report on page 41
provides more detail. The Company has no employees.
During the year, Saba Capital Management, L.P. (‘Saba’) held 29.0% of the Company’s issued share capital. Saba
participated in the tender offer, entering into agreements with the Company regarding the tender of their shares and a
standstill agreement. The entire in specie transaction detailed in note 22 related to their holding.
75
The European Smaller Companies Trust PLC Annual Report 2025
21 Change in financial liabilities
At
1 July 2024
£’000
Cashflows
£’000
Non-cash
changes
in foreign
exchange
movement
£’000
At
30 June 2025
£’000
Bank overdrafts (90,219) 81,214 823 (8,182)
Total (90,219) 81,214 823 (8,182)
At
1 July 2023
£’000
Cashflows
£’000
Non-cash
changes
in foreign
exchange
movement
£’000
At
30 June 2024
£’000
Bank overdrafts (94,016) 2,543 1,254 (90,219)
Total (94,016) 2,543 1,254 (90,219)
22 Tender offer
On 15 April 2025, the Company announced a tender offer to buy back up to 42.5% of the ordinary share capital and
eligible shareholders were given the option to continue investing or exit the Company, selecting either a cash exit option or
in specie consideration option.
A total of 166,097,075 ordinary shares were tendered, which represented 42.2% of ordinary shares in issue. Shareholders
holding 50,710,953 ordinary shares elected for the cash exit option and shareholders holding 115,386,122 ordinary shares
elected for the in specie consideration option. Accordingly, the Company’s assets were allocated into three pools
representing those shareholders wishing to continue investing (the ongoing pool), those shareholders wishing to sell their
shares back to the Company and receive cash (cash exit pool) and those shareholders wishing to sell their shares back to
the Company and receive the in specie transfer (in specie consideration option pool).
A pro-rata portion of the Company’s portfolio was realised, with the proceeds returned to those shareholders electing for
the cash exit option. Shareholders electing for the in specie consideration option, received a pro-rata portion of the
Company’s portfolio.
The net movement in the cash realisation pool shown below is the movement in fair value of the pool between the
calculation date of 19 May 2025 and the payment date of 26 June 2025:
Tender Pools
In specie
£’000
Cash exit
£’000
Total
£’000
Investments allocated to tender pools 242,770 107,486 350,256
Cash 3 3 6
Cash to cover expenses at pool allocation date 2,171 195 2,366
244,944 107,684 352,628
Net movement in cash realisation pool – 1,861 1,861
Costs of tender (2,171) (1,090) (3,261)
Tender calculations 242,773 108,455 351,228
Less shareholder tender withdrawn – (34) (34)
Tender payments to shareholders 242,773 108,421 351,194
23 Post balance sheet events
On 23 June 2025, the Company announced that the Board had agreed a combination with EAT by way of a scheme of
reconstruction under s.110 of the Insolvency Act 1986 and subsequent liquidation of EAT. The combination completed on
15 October 2025 and the Company issued 131,128,841 new shares at a price of 231.7347p per share to EAT shareholders
in consideration of £304.1m of net assets acquired from EAT. Following the issue of the new shares, the total number
ofshares in issue with voting rights was 358,641,369 ordinary shares, with each ordinary share holding one voting right.
Atotal of 51,733,676 ordinary shares are held in treasury.
Notes to the Financial Statements (continued)
76
The European Smaller Companies Trust PLC Annual Report 2025
Additional
information
Westwing, 0.5% of the portfolio
Company specialising in the home and living e-commerce sector
77
Investment portfolio at 30 June 2025 (unaudited)
Ranking
2025
Ranking
2024 Company Principal activities Industry Groups
Geographical
area
Valuation
2025
£’000
Percentage
of portfolio
1 1 Van Lanschot Kempen Banks Financials Netherlands 15,450 3.0
2 2 TKH Electronic and Electrical Equipment Industrials Netherlands 13,324 2.6
3 14 Alzchem Chemicals Basic Materials Germany 11,080 2.1
4 4 KSB Industrial Engineering Industrials Germany 10,947 2.1
5 5 IG Group Investment Banking and Brokerage
Services
Financials United
Kingdom
10,605 2.1
6 32 R&S Group Electronic and Electrical Equipment Industrials Switzerland 10,573 2.0
7 3 SUESS MicroTec Technology Hardware and Equipment Technology Germany 9,427 1.8
8 16 Gaztransport et
Technigaz
Oil, Gas and Coal Energy France 8,428 1.6
9 6 Stroeer Media Consumer
Discretionary
Germany 7,598 1.5
10 77 Elmos Semiconductor Technology Hardware and Equipment Technology Germany 6,984 1.4
10 Largest 104,416 20.2
11 24 Avolta Retailers Consumer
Discretionary
Switzerland 6,972 1.4
12 61 Banco Comercial
Portugues
Banks Financials Portugal 6,885 1.3
13 34 Karnov Consumer Services Consumer
Discretionary
Sweden 6,796 1.3
14 17 Andritz Industrial Engineering Industrials Austria 6,769 1.3
15 25 Acerinox Industrial Metals and Mining Basic Materials Spain 6,700 1.3
16 10 u-blox Technology Hardware and Equipment Technology Switzerland 6,601 1.3
17 – HBX Group Travel and Leisure Consumer
Discretionary
Spain 6,295 1.2
18 15 Recticel General Industrials Industrials Belgium 5,910 1.2
19 30 Grupo Catalana
Occidente
Non-life Insurance Financials Spain 5,892 1.1
20 54 Merlin Properties Real Estate Investment Trusts Real Estate Spain 5,822 1.1
20 Largest 169,058 32.7
21 52 Bonava Household Goods and Home
Construction
Consumer
Discretionary
Sweden 5,761 1.1
22 19 eDreams ODIGEO Travel and Leisure Consumer
Discretionary
Spain 5,715 1.1
23 28 Exosens Aerospace and Defense Industrials France 5,611 1.1
24 – Mycronic Technology Hardware and Equipment Technology Sweden 5,486 1.1
25 47 Jungheinrich Industrial Engineering Industrials Germany 5,370 1.0
26 45 Optima Bank Banks Financials Greece 5,273 1.0
27 56 Ionos Software and Computer Services Technology Germany 5,18 3 1.0
28 13 Deme Construction and Materials Industrials Belgium 5,154 1.0
29 74 Koninklijke BAM Group Construction and Materials Industrials Netherlands 5,12 9 1.0
30 33 Eckert & Ziegler Chemicals Basic Materials Germany 5,10 5 1.0
30 Largest 222,845 43.1
31 31 Quadient Technology Hardware and Equipment Technology France 5,075 1.0
32 12 Nordnet Investment Banking and Brokerage
Services
Financials Sweden 4,948 1.0
33 63 Alpha Bank Banks Financials Greece 4,946 0.9
34 87 Trigano Leisure Goods Consumer
Discretionary
France 4,938 0.9
35 51 Nexans Electronic and Electrical Equipment Industrials France 4,891 0.9
36 50 Munters Construction and Materials Industrials Sweden 4,681 0.9
37 – Indra Sistemas Software and Computer Services Technology Spain 4,659 0.9
38 29 Metlen General Industrials Industrials Greece 4,637 0.9
39 41 Kaufman & Broad Household Goods and Home
Construction
Consumer
Discretionary
France 4,620 0.9
40 11 Ipsos Media Consumer
Discretionary
France 4,586 0.9
40 Largest 270,826 52.3
The European Smaller Companies Trust PLC Annual Report 2025
78
Investment portfolio at 30 June 2025 (unaudited) (continued)
Ranking
2025
Ranking
2024 Company Principal activities Industry Groups
Geographical
area
Valuation
2025
£’000
Percentage
of portfolio
41 9 Criteo Software and Computer Services Technology France 4,543 0.9
42 88 Inficon Electronic and Electrical Equipment Industrials Switzerland 4,530 0.9
43 – Pfisterer Electronic and Electrical Equipment Industrials Germany 4,498 0.9
44 8 DFDS Industrial Transportation Industrials Denmark 4,427 0.9
45 85 Duerr Industrial Engineering Industrials Germany 4,409 0.9
46 93 JOST Werke Automobiles and Parts Consumer
Discretionary
Germany 4,370 0.8
47 – Aixtron Technology Hardware and Equipment Technology Germany 4,350 0.8
48 18 Mersen Electronic and Electrical Equipment Industrials France 4,286 0.8
49 – Flatexdegiro Investment Banking and Brokerage
Services
Financials Germany 4,282 0.8
50 20 Credito Emiliano Banks Financials Italy 4,243 0.8
50 Largest 314,764 60.8
51 60 CTP Real Estate Investment and Services Real Estate Netherlands 4,19 6 0.8
52 – Carl Zeiss Meditec Medical Equipment and Services Health Care Germany 4,12 8 0.8
53 – GVS General Industrials Industrials Italy 4,047 0.8
54 – Enity Banks Financials Sweden 4,032 0.8
55 – BHG Group Retailers Consumer
Discretionary
Sweden 3,896 0.8
56 76 Borregaard Chemicals Basic Materials Norway 3,895 0.8
57 – JCDecaux Media Consumer
Discretionary
France 3,863 0.8
58 123 Envipco Electronic and Electrical Equipment Industrials Netherlands 3,809 0.7
59 68 VGP Real Estate Investment and Services Real Estate Belgium 3,788 0.7
60 100 Dormakaba Electronic and Electrical Equipment Industrials Switzerland 3,748 0.7
60 Largest 354,166 68.5
61 – Clinica Baviera Health Care Providers Health Care Spain 3,675 0.7
62 43 Dalata Hotel Travel and Leisure Consumer
Discretionary
Ireland 3,594 0.7
63 73 PVA TePla Technology Hardware and Equipment Technology Germany 3,584 0.7
64 44 Stratec Medical Equipment and Services Health Care Germany 3,557 0.7
65 57 Modern Times Media Consumer
Discretionary
Sweden 3,553 0.7
66 23 Smartcraft Software and Computer Services Technology Norway 3,523 0.7
67 – SFC Energy Alternative Energy Energy Germany 3,520 0.7
68 78 NCAB Group Technology Hardware and Equipment Technology Sweden 3,441 0.7
69 53 Acast Software and Computer Services Technology Sweden 3,423 0.6
70 – Viscofan Food Producers Consumer Staples Spain 3,382 0.6
70 Largest 389,418 75.3
71 96 Montana Aerospace Aerospace and Defence Industrials Switzerland 3,306 0.6
72 82 NED Apparaten Electronic and Electrical Equipment Industrials Netherlands 3,265 0.6
73 91 NSI Real Estate Investment Trusts Real Estate Netherlands 3 ,18 5 0.6
74 38 ALSO Technology Hardware and Equipment Technology Switzerland 3,16 9 0.6
75 72 Hellenic Exchanges Investment Banking and Brokerage
Services
Financials Greece 3 ,16 5 0.6
76 119 Cint Group Software and Computer Services Technology Sweden 3,16 5 0.6
77 64 Nordex Alternative Energy Energy Germany 3,095 0.6
78 – Wienerberger Construction and Materials Industrials Austria 3,089 0.6
79 66 FLEX LNG Industrial Transportation Industrials Norway 3,036 0.6
80 65 Granges Automobiles and Parts Consumer
Discretionary
Sweden 3,029 0.6
80 Largest 420,922 81.3
The European Smaller Companies Trust PLC Annual Report 2025
79
Investment portfolio at 30 June 2025 (unaudited) (continued)
Ranking
2025
Ranking
2024 Company Principal activities Industry Groups
Geographical
area
Valuation
2025
£’000
Percentage
of portfolio
81 90 CIE Automotive Automobiles and Parts Consumer
Discretionary
Spain 3,028 0.6
82 125 Bike24 Retailers Consumer
Discretionary
Germany 2,991 0.6
83 – Bilfinger Industrial Support Services Industrials Germany 2,927 0.6
84 83 Elekta Medical Equipment and Services Health Care Sweden 2,902 0.6
85 39 Dermapharm Pharmaceuticals and Biotechnology Health Care Germany 2,888 0.6
86 81 Smartoptics Software and Computer Services Technology Norway 2,832 0.6
87 106 Alma Media Media Consumer
Discretionary
Finland 2,782 0.5
88 – Teleperformance Industrial Support Services Industrials France 2,728 0.5
89 122 Westwing Retailers Consumer
Discretionary
Germany 2,728 0.5
90 48 Cewe Shiftung Consumer Services Consumer
Discretionary
Germany 2,720 0.5
90 Largest 449,448 86.9
91 – Flsmidth & Co Construction and Materials Industrials Denmark 2,711 0.5
92 97 Montea Real Estate Investment Trusts Real Estate Belgium 2,709 0.5
93 108 FNAC Darty Retailers Consumer
Discretionary
France 2,697 0.5
94 – Elopak General Industrials Industrials Norway 2,581 0.5
95 58 Detection Technology Electronic and Electrical Equipment Industrials Finland 2,555 0.5
96 59 Daetwyler General Industrials Industrials Switzerland 2,550 0.5
97 – Kalmar Industrial Engineering Industrials Finland 2,547 0.5
98 – Mildef Aerospace and Defense Industrials Sweden 2,512 0.5
99 – Lindab International Construction and Materials Industrials Sweden 2,503 0.5
100 – Porr Construction and Materials Industrials Austria 2,493 0.5
100 Largest 475,306 91.9
101 – Stolt-Nielsen Industrial Transportation Industrials Norway 2,491 0.5
102 – Biogaia Pharmaceuticals and Biotechnology Health Care Sweden 2,488 0.5
103 – Neinor Homes Real Estate Investment and Services Real Estate Spain 2,390 0.5
104 109 Safilo Personal Goods Consumer
Discretionary
Italy 2,349 0.5
105 – Billerud Industrial Materials Basic Materials Sweden 2,346 0.5
106 – HomeToGo Travel and Leisure Consumer
Discretionary
Germany 2,292 0.4
107 55 Arnoldo Mondadori
Editore
Media Consumer
Discretionary
Italy 2, 274 0.4
108 36 Befesa Waste and Disposal Services Utilities Germany 2,225 0.4
109 84 Boozt Retailers Consumer
Discretionary
Sweden 2,212 0.4
110 102 Burckhardt
Compression
Industrial Engineering Industrials Switzerland 2,14 4 0.4
110 L arge st 498,517 96.4
111 111 Bonesupport Pharmaceuticals and Biotechnology Health Care Sweden 2,141 0.4
112 114 Planisware Software and Computer Services Technology France 2,096 0.4
113 7 Fugro Construction and Materials Industrials Netherlands 2,077 0.4
114 118 NTG Nordic Transport Industrial Transportation Industrials Denmark 2,068 0.4
115 67 Eurogroup Laminations Industrial Support Services Industrials Italy 1,980 0.4
116 – Navigator Industrial Materials Basic Materials Portugal 1,885 0.4
117 70 Arbonia Construction and Materials Industrials Switzerland 1,786 0.3
118 62 Corticeira Amorim General Industrials Industrials Portugal 1,665 0.3
119 98 Vimian Group Health Care Providers Health Care Sweden 1,573 0.3
120 107 Dexelance Household Goods and Home
Construction
Consumer
Discretionary
Italy 1,551 0.3
Total investments 517,339 100.0
The European Smaller Companies Trust PLC Annual Report 2025
80
Alternative performance measures (unaudited)
The Company uses the following Alternative Performance Measures (‘APMs’) throughout the annual report, financial
statementsand notes to the financial statements. The APMs are reconciled to the financial statements through the narrative
below. The Board believes that each of the APMs, which are typically used within the investment trust sector, provide additional
useful information to shareholders to help assess the Company’s performance against its peer group.
Discount or premium
The amount by which the market price per share of an investment trust is either higher (premium) or lower (discount) than the
NAV per ordinary share, expressed as a percentage of the NAV per ordinary share.
NAV
pence
Share price
pence
Discount to NAV
%
At 30 June 2025 224.45 211.50 5.8
At 30 June 2024 201.01 178.40 11.2
Gearing/(Net Cash)
Gearing represents the excess amount above shareholders’ funds of total investments, expressed as a percentage of the
shareholders’ funds. If the amount calculated is negative, this is a ‘net cash’ position and no gearing.
2025 2024
Investments held at fair value through profit or loss (page 57) (£’000) (A) 517,339 883,842
Net assets (page 57) (£’000) (B) 510,677 798,594
Gearing (C = (A / B) -1) (C) 1.3% 10.7%
Net asset value (‘NAV’) per ordinary share
The value of the Company’s assets (i.e. investments (see note 9) and cash held (see Balance Sheet) less any liabilities (i.e. bank
overdraft (see page 57 and note 12)) for which the Company is responsible divided by the number of shares in issue (see note 14).
The aggregate NAV is also referred to as total equity in the Balance Sheet. The NAV per share is published daily and the year end
NAV can be found on page 57 and further information is available on page 75 in note 18 within the notes to the financial statements.
Ongoing charges
The ongoing charges ratio has been calculated in accordance with the guidance issued by the AIC as the total investment
management fees and administrative expenses and expressed as a percentage of the net asset values throughout the year.
2025
£’000
2024
£’000
Management fees 4,065 4,166
Other administrative expenses (note 4) 1,789 875
Less: non-recurring expenses
1
(822) (51)
Ongoing charges 5,032 4,990
Average net assets
2
735,806 741,815
Ongoing charges ratio 0.68% 0.67%
1 The non-recurring fees primarily consist of costs in relation to the requisitioned general meeting
2 Calculated using the average daily net asset value
The European Smaller Companies Trust PLC Annual Report 2025
81
Alternative performance measures (unaudited) (continued)
Total return
The total return on the share price or NAV takes into account both the rise and fall of NAVs/share prices and dividends paid to
shareholders. Each component of the total return needs to be compounded as a geometric return to arrive at the total return.
Anydividends received by a shareholder are assumed to have been reinvested in either additional shares (for share price total
return) or the Company’s assets (for NAV total return). Dividends paid and payable are set out in note 8 on page 65.
2025 2024
NAV per share Share price NAV per share Share price
Opening NAV/Share price per share (pence) 201.01 178.40 184.26 154.00
Closing NAV/Share price per share (pence) 224.45 211.50 201.01 178.40
Change in the year (%) 11.7 18.6 9.1 15.8
Impact of dividends reinvested (%) 2.6 2.9 2.7 3.2
Total return for the year (%) 14.5 21.9 12.0 19.5
Dividend yield
The yield is the annual dividend expressed as a percentage of the year end share price.
30 June 2025 30 June 2024
Annual dividend (pence) (A) 4.90 4.80
Share price (pence) (B) 211.50 178.40
Yield (C=A/B) (%) (C) 2.3 2.7
The European Smaller Companies Trust PLC Annual Report 2025
82
Glossary
Alternative Investment Fund Managers
Directive (‘AIFMD’)
Agreed by the European Parliament and the Council of the
European Union and transposed into English Law, the AIFMD
classifies certain investment vehicles, including investment
companies, as Alternative Investment Funds (‘AIFs’) and
requires them to appoint an Alternative Investment Fund
Manager (‘AIFM’) and depositary to manage and oversee the
operations of the investment vehicle. The Board of Directors
retains responsibility for strategy, operations and compliance
and the directors retain a fiduciary duty to shareholders.
Alternative Performance Measures
A glossary of alternative performance measures can be found
on page 83.
Association of Investment Companies
(‘AIC’)
The Company is a member of the AIC which is the trade body
for investment companies and represents the industry in
relation to various matters which impact the regulation of
suchentities.
Benchmark
An index against which performance is compared. For the
year ended 30 June 2022, this was the Euromoney Smaller
European Companies ex UK Index. With effect from 1 July
2022, this is the MSCI Europe (ex UK) Small Cap Index.
Custodian
The custodian is responsible for ensuring the safe custody
ofthe Company’s assets and that all transactions in the
underlying holdings are transacted in an accurate and
timelymanner.
Depositary
As an AIF the Company is required to appoint a depositary
which has responsibility for overseeing the operations of the
Company including safekeeping, cash monitoring and
verification of ownership and valuation of the underlying
holdings and is responsible for the appointment of a
custodian. The depositary is strictly liable for the loss of any
investments or other assets in its custody unless it has notified
that it has discharged its liability in certain markets. The
depositary has confirmed that it has not discharged liability
inrelation to any of the Company’s assets.
Derivative
A contract between two or more parties in relation to an
underlying security. The value of a derivative will fluctuate in
accordance with the value of the security and is a form of
gearing as the fluctuations in value are usually greater than
thefluctuations in the underlying security’s value. Examples
ofderivatives are put and call options, swap contracts,
futuresand contracts for difference. Foreign exchange,
interest ratesand commodities may also be traded using
derivativecontracts.
Dividend dates
When declared or recommended, each dividend will have
three key dates applied to it. The payment date is the date on
which shareholders will receive their dividend, either by BACS
transfer or by receipt of a dividend cheque. The record date
applied to the dividend is used as a cut-off for the Company’s
registrars to know which shareholders should be paid a
dividend. Only shareholders on the Register of Members at
the close of business on the record date will receive the
dividend. The ex-dividend date is the business day before the
record date and is the date upon which the Company’s net
asset value per ordinary share will be disclosed ex-dividend.
Investment trusts
Investment trusts are public limited companies, listed on the
London Stock Exchange, which provide shareholders with a
professionally managed portfolio of investments. Investment
trusts are exempt from tax on the capital gains arising on their
investments subject to meeting certain criteria. Income, net of
expenses and tax, is substantially distributed to shareholders.
Investment trusts are also known as investment companies,
although the tax legislation retains the reference to
investmenttrusts.
Liquidity
In the context of the liquidity of shares in the stock market,
this refers to the availability of buyers and sellers in the market
for the share in question. Where the market in a particular
share is described as liquid, that share will be in demand and
holders wishing to sell their shares should find ready buyers.
Conversely, where the market in a share is illiquid the difficulty
of finding a buyer or seller will tend to depress or increase the
price that might be negotiated for a sale or purchase.
Investment companies can use allotment or buyback powers
to assist the market liquidity in their shares.
Market capitalisation (‘market cap’)
The market value of a company, calculated by multiplying the
mid-market price per share by the number of shares in issue.
The European Smaller Companies Trust PLC Annual Report 2025
83
AIFMD disclosures and remuneration
In accordance with the Alternative Investment Fund Managers
Directive, information in relation to the Company’s leverage
and remuneration of Janus Henderson Fund Management
UKLimited, as the Company’s Alternative Investment Fund
Manager are required to be made available to investors.
Thesedisclosures, including those on the AIFM’s
remuneration policy, are contained in an AIFMD Disclosure
document which can be found on the Company’s website.
General Data Protection Regulation (‘GDPR’)
GDPR came into force on 25 May 2019. It aims to protect
andempower individual data privacy and reshape the way
organisations approach data privacy. A privacy statement
canbe found on the website www.janushenderson.com.
ISA
The Company intends to continue to manage its affairs in
order to qualify as an eligible investment for a stocks and
shares ISA.
Non-Mainstream Pooled Investments Status
The Company currently conducts its affairs so that its ordinary
shares of 1.5625p can be recommended by Independent
Financial Advisers to ordinary retail investors in accordance
with the FCA rules in relation to non-mainstream investment
products and intends to continue to do so for the foreseeable
future. The shares are excluded from the FCA’s restrictions
which apply to non-mainstream investment products because
they are shares in an investment trust.
Taxonomy regulation
Regulation (EU) 2020/852 establishes the basis for the EU
taxonomy. The EU taxonomy is a classification system,
establishing a list of environmentally sustainable economic
activities to provide companies, investors and policymakers
with appropriate definitions for which economic activities can
be considered environmentally sustainable. In accordance
with the Taxonomy Regulation, the Company confirms that the
investments underlying this financial product do not take into
account the EU criteria for environmentally sustainable
economic activities.
General Shareholder Information
Investing
The European Smaller Companies Trust PLC is listed on
theLondon Stock Exchange and you can buy its shares
through a platform, stockbroker, share shop or bank.
JanusHenderson also offers a range of other options so
thatyou can invest in the way that is best for you. Details
onhow to investment and the latest Key Information
Documents can be found on the Company’s website:
www.europeansmallercompaniestrust.com
The website also includes factsheets, interviews, current
information on the Company and up-to-date share price and
net asset value details.
To sign up for expert insights about investment trusts,
updates from our fund managers as well as AGMs please
visit this page: www.janushenderson.com/en-gb/
investor/subscriptions
Follow the Janus Henderson Investment Trusts on
LinkedIn – Janus Henderson Investment Trusts, UK
Share identifiers
ISIN: GB00BMCF8689
Sedol: BMCF868
Ticker: ESCT
The ordinary shares of the Company are listed on the Main
Market of the London Stock Exchange.
Share register enquiries
Contact the Company’s registrar Equiniti at:
Equiniti Limited, Aspect House, Spencer Road,
Lancing, West Sussex, BN99 6DA.
Telephone: 0371 384 2472
(or +44 121 415 7047 if calling from overseas)
Lines are open 8.30 am to 5.30 pm, Monday to Friday
There is a range of shareholder information online. You can
check your holding and find practical help on transferring
shares or updating your details at www.shareview.co.uk.
Financial calendar
Interim results published February 2026
2nd interim dividend paid February 2026
3rd interim dividend paid May 2026
4th interim dividend paid August 2026
Annual results published October 2026
Annual General Meeting November 2026
The European Smaller Companies Trust PLC Annual Report 2025
84
Warning to shareholders
Many companies are aware that their shareholders may received unsolicited phone calls or correspondence concerning
investment matters. These are typically from overseas based ‘brokers’ who target UK shareholders offering to sell them what
often turn out tobe worthless or high risk shares in US or UK investments. They can be very persistent and extremely
persuasive. Shareholders are therefore advised to be very wary of any unsolicited advice, offers to buy shares at a discount
or offers of free company reports. Please note that itis very unlikely that either the Company or the Company’s registrar,
Equiniti, would make unsolicited telephone calls to shareholders and that any such calls would relate only to official
documentation already circulated to shareholders and never in respect ofinvestment ‘advice’.
Service providers
Service providers
Alternative Investment Fund Manager
Janus Henderson Fund Management UK Limited
201 Bishopsgate
London EC2M 3AE
Depositary and custodian
HSBC Bank plc
8 Canada Square
London E14 5HQ
Corporate broker
Winterflood Investment Trusts
Riverbank House
2 Swan Lane
London
EC4R 3GA
Corporate Secretary
Janus Henderson Secretarial Services UK Limited
201 Bishopsgate
London EC2M 3AE
Telephone:020 7818 1818
Registrar
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
Telephone:+44 (0) 371 384 371
Lines are open 8.30 am to 5.30 pm, Monday to Friday
There is a range of shareholder information online
You can check your holding and find practical help ontransferring
shares or updating your details at www.shareview.co.uk.
Registered office
201 Bishopsgate
London EC2M 3AE
Statutory Auditor
Ernst & Young LLP
25 Churchill Place
London E14 5EY
The European Smaller Companies Trust PLC Annual Report 2025
85
Notice of
Annual General
Meeting
Vimian Group, 0.3% of the portfolio
Global animal health company
86
Notice is hereby given that the 35th Annual General Meeting
of The European Smaller Companies Trust PLC (the
‘Company’) will be held at 201 Bishopsgate, London, EC2M
3AE on Monday 24 November 2025 at 12.30 pm for the
purposes of considering and, if thought fit, passing the
following resolutions, of which resolutions 1 to 14 will be
proposed as ordinary resolutions and resolutions 15 to 17 will
be proposed as special resolutions:
Ordinary resolutions
1 To receive the annual report and audited financial
statements for the year ended 30 June 2025.
2 To approve the Directors’ Remuneration Policy.
3 To approve the Directors’ Remuneration Report for the
year ended 30 June 2025.
4 To elect Nadia Meier-Kirner as a director.
5 To elect Kate Cornish-Bowden as a director.
6 To elect Stuart Paterson as a director.
7 To re-elect James Williams as a director.
8 To re-elect Daniel Burgess as a director.
9 To re-elect Ann Grevelius as a director.
10 To re-appoint Ernst & Young LLP as auditor to the Company.
11 To authorise the Audit Committee to determine the
auditor’s remuneration.
12 To approve the continuation of the Company.
13 To approve the Company’s dividend policy of paying four
interim dividends per year.
14 THAT in substitution for all existing authorities the directors
be and hereby are generally and unconditionally
authorised pursuant to section 551 of the Companies Act
2006 (‘Act’) to exercise all the powers of the Company to
allot relevant shares (within the meaning of section 540
ofthe Act) up to an aggregate nominal amount of £641,211
(orsuch other amount representing 10% of the issued
ordinary share capital at the date of passing of this
resolution) for a period expiring (unless previously
renewed, varied or revoked by the Company in general
meeting) on the earlier of the date falling 15 months, or
from the conclusion of the next annual general meeting,
after the passing of this resolution, provided that the
Company may make an offer or agreement which would
or might require relevant shares to be allotted after expiry
of this authority and the Board may allot relevant shares in
pursuance of that offer or agreement as if the authority
conferred hereby had not expired.
Special resolutions
15 THAT in substitution for all existing authorities and subject
to the passing of resolution 11 the directors be and hereby
are empowered pursuant to section 570 and 573 of the
Companies Act 2006 (the ‘Act’) to allot shares or make
offers or agreements to allot shares (within the meaning of
section 560 of the Act) for cash pursuant to the authority
conferred by resolution 12 and to sell ordinary shares from
treasury for cash (by virtue of section 560(3) of the Act) in
each case, as if section 561 of the Act did not apply to the
allotment or sale. This power is limited to:
(a) the allotment or issue from treasury of shares whether
by way of a rights issue, open offer or otherwise to
ordinary members and/or holders of any other shares
in accordance with the rights of those shares where
the shares respectively attributable to the interests of
all ordinary members and/or such holders are
proportionate (or as nearly as may be) to the respective
numbers of ordinary shares and such shares held by
them (or are otherwise allotted in accordance with the
rights attaching to such shares) subject in either case
to such exclusions or other arrangements as the
directors may deem necessary or expedient in relation
to fractional entitlements or local or practical problems
under the laws of, or the requirements of, any
regulatory body or any stock exchange in any territory
or otherwise howsoever; and
(b) the allotment or issue from treasury (otherwise than
pursuant to subparagraph (a) above) of shares up to a
maximum aggregate nominal value of £641,211 (or such
other amount representing 10% of the Company’s
issued ordinary share capital at the date of passing of
this resolution); and
(c) the allotment or issue from treasury of shares at a price
not less than the net asset value per share as at the
latest practicable date before such allotment of shares
as determined by the directors in their reasonable
discretion;
and shall expire at the earlier of the date falling 15 months, or
from the conclusion of the next annual general meeting of the
Company, after the date of the passing of this resolution, save
that the directors may before such expiry make an offer or
agreement which would or might require shares to be allotted
after such expiry and the directors may allot shares in
pursuance of such an offer or agreement as if the power
conferred hereby had not expired.
Notice of Annual General Meeting
The European Smaller Companies Trust PLC
(an investment company within the meaning of section 833 of the Companies Act 2006, incorporated in England and Wales with
registered number 2520734)
The European Smaller Companies Trust PLC Annual Report 2025
87
16 THAT in substitution for all existing authorities the
Company be and is hereby generally and unconditionally
authorised in accordance with section 701 of the
Companies Act 2006 to make market purchases (within
the meaning of section 693(4) of the Act) of ordinary
shares of 1.5625p each in the capital of the Company, on
such terms and in such manner as the directors may from
time to time determine, provided that:
(a) (the maximum aggregate number of ordinary shares
hereby authorised to be purchased is 61,515,219
(representing approximately 14.99% of the issued
ordinary share capital of the Company as at
17October 2025, being the latest practicable date
prior to the publication of this Notice) or, if changed,
the number representing 14.99% of the issued ordinary
share capital of the Company as at the date of the
passing of this resolution;
(b) the maximum price (exclusive of expenses) which may
be paid for an ordinary share shall not exceed the
higher of:
(i) an amount equal to 105% of the average of the
middle market quotations for an ordinary share as
taken from the London Stock Exchange Daily
Official List for the five business days immediately
preceding the date of purchase; and
(ii) the higher of the price of the last independent trade
and the highest current independent bid on the
London Stock Exchange when the purchase is
carried out;
(c) the minimum price (exclusive of expenses) which may
be paid for an ordinary share shall be the nominal
value of that share;
(d) the authority hereby conferred shall expire at the earlier
of the date falling 15 months, or from the conclusion of
the next annual general meeting of the Company, after
the passing of this resolution, unless such authority is
renewed before that expiry; and
(e) the Company may make a contract to purchase
ordinary shares under the authority hereby conferred
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.
17 THAT a general meeting other than an annual general
meeting may be called on not less than 14 clear days’
notice, such authority to expire at the conclusion of the
next annual general meeting of the Company following the
passing of this resolution.
By order of the Board
Janus Henderson Secretarial Services UK Limited
Corporate Secretary
20 October 2025
Registered Office:
201 Bishopsgate, London EC2M 3AE
Notice of Annual General Meeting
MOORGATE
BISHOPSGATE
PRIMROSE ST.
WORSHIP STREET
201 Bishopsgate
London EC2M 3AE
LIVERPOOL
STREET
STATION
APPOLD ST.
SUN STREET
BROADGATE
CIRCLE
FINSBURY PAVE.
EARL ST.
WORSHIP STREET
ROPEMAKER STREET
LIVERPOOL ST
LONDON WALL
WILSON ST.
BISHOPSGATE
GREAT EASTERN ST.
COMMERCIAL ST.
SHOREDITCH
HOUNDSDITCH
AL DGATE
MIDDLESEX
STREET
CHISWELL STREET
SOUTH PLACE
ELDON ST.
FINSBU RY
CIRCUS
CITY ROAD
FINSBURY SQ.
FINSBURY SQ .
CLIFTON ST.
SPITALFIELDS
MARKET
FOLGATE ST.
NORTON
MIDDLESEX ST.
BRUSHFIELD STREET
APPOLD ST.
Annual General Meeting venue
The European Smaller Companies Trust PLC Annual Report 2025
88
Explanations of the Resolutions
The information set out below is an explanation of the
business to be considered at the Meeting.
Resolutions 1 to 14 are proposed as ordinary resolutions.
Thismeans that for each of those resolutions to be passed more
than half of the votes cast must be in favour of the resolution.
Resolutions 15 to 17 are proposed as special resolutions. This
means that for each of those resolutions to be passed at least
three-quarters of the votes cast must be infavour of the resolution.
Resolution 1: Company’s annual report and
audited financial statements
Shareholders will be given an opportunity at the meeting to
ask questions on the annual report. At the end of the
discussion, members will be invited to receive the annual
report and audited financial statements.
Resolution 2: Directors’ Remuneration Policy
Members are ordinarily requested to approve the Directors’
Remuneration Policy (‘Policy’) once every three years. This was
last approved at the annual general meeting held on
27November 2023. Shareholders are asked to approve a
newPolicy at the meeting, ahead of the normal date for
approaching shareholders, to approve a policy to permit
additional payments to directors in exceptional circumstances
for duties beyond those normally expected as part of a non-
executive director’s appointment. This is expected to be a rare
occurrence and any discretionary fees paid to the directors will
be clearly disclosed in the Directors’ Remuneration Report
accompanied by an explanation of the work undertaken and
why it was deemed necessary to pay such additional
remuneration. The vote on the Policy is binding.
Resolution 3: Approve the Directors’
Remuneration Report
Members are requested to approve the Directors’
Remuneration Report (excluding the Directors’ Remuneration
Policy) for the year ended 30 June 2025. Thisis set out on
pages 39 to 42 of the annual report. The vote is advisory and
does not affect the remuneration payable to any individual
director. The Board will take feedback from members
regarding remuneration and incorporate this into any future
remuneration discussions.
Resolutions 4 to 9: Election and re-election of
directors
Resolution 4 relates to the election of Nadia Meier Kirner who
joined the Board as a director on 28 April 2025. Nadia has 18
years’ experience in European mid-market private equity with
Triton Partners in Germany. Being based in Germany, she
provides insight to sentiment on the Continent.
Resolution 5 relates to the election of Kate Cornish-Bowden
who joined the Board on 16 October 2025 following the
successful combination with EAT. Kateis a former global
equities fund manager and has extensive knowledge of the
investment trust sector.
Resolution 6 relates to the election of Stuart Paterson who
joined the Board on 16 October 2025 following the successful
combination with European Assets Trust PLC. Stuart has
more than 25 years’ experience of equity investing in
European private companies.
As a matter of course, all existing directors retire at each
annual general meeting.
Resolution 7 relates to the re-election of James Williams who
joined the Board as a director on 1 November 2023. He has
over 30 years’ international business experience in Europe
and Asia, including nearly 20 years in the investment banking
industry. He is the Chairman of the Board.
Resolution 8 seeks the re-election of Daniel Burgess, who
joined the Board on 25 November 2019. Daniel has significant
auditing and accounting experience having been a partner at
KPMG LLP for twenty-three years. He is Chairman of the
Audit Committee.
Resolution 9 relates to the re-election of Ann Grevelius,
whojoined the Board on 23 September 2019. Ann has over
30 years’ experience in the asset management sector and
has been active in the venture capital industry for the last
several years. Her experience of European markets provides
useful context to the investment background.
Simona Heidempergher will be retiring from the Board at the
conclusion of the meeting so does not offer herself for
re-election.
The Board has reviewed the performance and commitment
ofthe directors standing for election and re-election and
considers that each of the directors should continue in office
as they bring wide-ranging, current and relevant business
experience that allows them to contribute effectively to the
leadership of the Company. Furthermore, the Board is
satisfied that, having considered each directors’ experience
and the nature of, and anticipated demands on their time by
their other business commitments, that each director is able
to commit the time required to fulfil their responsibilities as a
director of the Company.
All the directors are considered independent for the purposes
of the AIC Corporate Governance Code. The background and
experience of the directors is set out on pages 26 and 27 of
the annual report.
Resolutions 10 and 11: Appointment and
remuneration of the auditor
Members are required to approve the appointment of the
Company’s auditor each year and to give authority to the
Audit Committee to determine their remuneration. Ernst &
Young LLP were appointed as the auditor at the annual
general meeting on 27 November 2017 and reappointed by
members at subsequent meetings. Following satisfactory
performance, the Company is recommending their re-
appointment in respect of the year ending 30 June 2026
andseeking authority for the Audit Committee to determine
their remuneration.
Notice of Annual General Meeting
The European Smaller Companies Trust PLC Annual Report 2025
89
Resolution 12: Continuation of the Company
In accordance with the Company’s articles of association,
thedirectors are required to put a resolution to members
everythree years to approve the continuation of the Company.
Members last approved the continuation of the Company
in2022 and this resolution continues the cycle. The Board is
recommending that members vote in favour of the resolution.
Resolution 13: Dividend policy
As set out in the scheme documents for the combination with
EAT, the Company will move to paying quarterly dividends
with the first interim dividend expected to be paid in February
2026. As shareholders will no longer be able to vote on the
final dividend and to ensure shareholders can continue to
have a say on this important matter, a resolution seeking
approval of the Company’s approach to paying four interim
dividends in each year will be put to shareholders ateach
annual general meeting.
Resolution 14: Authority to allot shares
At the annual general meeting held on 25 November 2025,
thedirectors were granted authority to issue up to 10% of the
Company’s issued share capital at the date of the passing of
the resolution. No shares have been issued under this
authority, which is due to expire at the Meeting. This resolution
will renew the authority and allow the directors to issue up to
41,037,504 ordinary shares (with a nominal value of £641,211)
(or such other amount being 10% of the issued share capital
as at the date of this resolution). The resolution is set out in full
in the Notice. If renewed, the authority will expire at the earlier
of the date falling 15 months, or from the conclusion of the next
annual general meeting, after the passing of this resolution.
Resolution 15: Power to disapply pre-emption
rights
This resolution will give the directors power to disapply pre-
emption rights in respect of any new shares issued under
theauthority provided by resolution 14 or sold from treasury.
Ifrenewed, the power will expire at the earlier of the date falling
15 months after, or from the conclusion of the next annual
general meeting following the passing of this resolution.
The directors will only allot shares pursuant to resolutions 14
and 15 to take advantage of opportunities in the market as
they arise and only if they believe it to be advantageous to the
Company’s existing members to do so and when it would not
result in any dilution of net asset value per share (i.e. shares
will only be issued at a premium to net asset value).
Resolution 16: Repurchase of the Company’s
shares
At the annual general meeting held on 25 November 2025, the
directors were granted authority to repurchase up to 14.99%
of the Company’s issued share capital at the date of the
passing of the resolution. Excluding the tender offer, 205,695
ordinary shares have been repurchased since the last annual
general meeting. This resolution seeks to renew the
Company’s authority to repurchase its own shares and cancel
or hold them in treasury. If this resolution is passed, the
maximum aggregate number of ordinary shares which may be
purchased is 61,515,219 (representing approximately 14.99%
of the issued ordinary share capital of the Company as at
17October 2025, being the latest practicable date prior to the
publication of the Notice of Meeting) or, if changed, the
number representing 14.99% of the issued ordinary share
capital of the Company as at the date of the passing of this
resolution. The authority will expire at the earlier of the date
falling 15 months, or the conclusion of the next annual general
meeting, after the passing of this resolution. It is the present
intention of the directors to seek asimilar authority annually.
The directors believe that, from time to time and subject to
market conditions, it will continue to be in the members’
interests to buy back the Company’s shares when they are
trading at a discount to the underlying net asset value per
share. Repurchases of the Company’s shares provide a
modest uplift in the net asset value for existing members and
often results in the share price more closely reflecting the
underlying value of the portfolio. Repurchasing an overhang
ofstock in the market further ensures that the discount does
not widen unduly.
The Company may utilise the authority to purchase shares by
either a single purchase or a series of purchases when market
conditions allow, with the aim of maximising the benefit to
members. This proposal does not indicate that the Company
will purchase shares at any particular time or price, nor imply
any opinion on the part of the directors as to the market or
other value of the Company’s shares.
Resolution 17: Notice of general meetings
The Companies Act 2006 stipulates that the notice period for
general meetings (other than the annual general meeting) is
21days unless member approval to reduce the period to 14
days has been given. In order to maintain maximum flexibility,
the Board is seeking approval to allow general meetings (other
than the annual general meeting) to be called on 14 days’
notice. This authority will only be used if it is in the best
interests of members to do so and where members are given
the opportunity to vote at such meetings by electronic means.
The authority will expire at the conclusion of the annual
general meeting in 2026. Directors will seek to renew this
authority annually.
Notes to the Meeting
1. Rights to attend and vote
Subject to Note 2, all of the Company’s members are entitled
to attend, speak and vote at the forthcoming annual general
meeting or at any adjournment(s) thereof. On a poll each
member has one vote per share.
2. Voting record date
Only members registered in the Register of Members of the
Company at 6.30 pm on Thursday 20 November 2025 (the
‘specified time’) shall be entitled to attend, speak and vote at
Notice of Annual General Meeting
The European Smaller Companies Trust PLC Annual Report 2025
90
the annual general meeting in respect of the number of voting
rights registered in their name at that time. Changes to entries
on the Register of Members after the specified time shall be
disregarded in determining the rights of any person to attend
and vote at the Meeting.
If the annual general meeting is adjourned for no more than
48hours after the original meeting time, the same specified
time will also apply for the purpose of determining the
entitlement of members to attend, speak and vote (and for the
purpose of determining the number of votes they may cast) at
the adjourned meeting.
If the annual general meeting is adjourned for a longer period
then, to be so entitled, members must be entered on the
Company’s Register of Members at 6.30 pm on the day which
is two days (excluding non-working days) before the day of the
adjourned meeting or, if the Company gives notice of the
adjourned meeting, at any time specified in that notice.
In the case of joint holders of a voting right, the vote of the
senior who tenders a vote, whether in person or by proxy,
shall be accepted to the exclusion of the votes of the other
joint holders and, for this purpose, seniority shall be
determined by the order in which the names stand in the
Register of Members in respect of the joint holding.
3. Right to appoint proxies
Pursuant to section 324 of the Act a member entitled to
attend and vote at the Meeting may appoint one or more
proxies, provided that each proxy is appointed to exercise the
rights attached to different shares held by him. A proxy need
not be a member of the Company.
If the total number of voting rights that the Chairman will be
able to vote (taking into account any proxy appointments from
members over which he is given discretion and any voting
rights in respect of his own shares) is such that he will have a
notifiable obligation under the Disclosure Guidance and
Transparency Rules (‘DTRs’) of the Financial Conduct
Authority (‘FCA’), the Chairman will make the necessary
notifications to the Company and to the FCA. Therefore, any
member holding 3% or more of the voting rights in the
Company who grants the Chairman a discretionary proxy in
respect of some or all of those voting rights and so would
otherwise have a notification obligation under the DTRs, need
not make a separate notification to the Company and to the
FCA. However, any member holding 3% or more of the voting
rights in the Company who appoints a person other than the
Chairman as proxy will need to ensure that both the member
and the proxy comply with their respective disclosure
obligations under the DTRs.
Section 324 of the Act does not apply to persons nominated
to receive information rights pursuant to section 146 of the
Act. Persons nominated to receive information rights under
section 146 of the Act have been sent this Notice and are
hereby informed, in accordance with section 149(2) of the Act,
that they may have the right under an agreement with the
registered member by whom they are nominated to be
appointed, or to have someone else appointed, as a proxy for
this Meeting. If they do not wish to exercise their right or do
not have such right, they may have a right under such an
agreement to give instructions to the member as to the
exercise of voting rights.
Nominated persons should contact the registered member by
whom they were nominated (not the Company) in respect of
their arrangements. The rights of members relating to the
appointment of proxies do not apply to nominated persons.
4. Proxies’ rights to vote at the Meeting
On a vote by a show of hands, each proxy has one vote. If a
proxy is appointed by more than one member and all such
members have instructed the proxy to vote in the same way,
the proxy will only be entitled on a show of hands to vote ‘for’
or ‘against’ as applicable. If a proxy is appointed by more than
one member, but such members have given different voting
instructions, the proxy may on a show of hands vote both ‘for’
and ‘against’ in order to reflect the different voting
instructions.
On a poll, all or any of the voting rights of the member may be
exercised by one or more duly appointed proxies. However,
where a member appoints more than one proxy, section
285(4) of the Act does not permit the exercise by the proxies
taken together of more extensive voting rights than could be
exercised by the member in person.
5. Voting by corporate representatives
Corporate representatives are entitled to attend, speak and
vote on behalf of the corporate member in accordance with
section 323 of the Act provided they do not do so in relation
to the same shares.
6. Receipt and termination of proxies
To be valid the enclosed Form of Proxy must be lodged with
the Company’s registrar (Equiniti Limited, Aspect House,
Spencer Road, Lancing, West Sussex, BN99 6DA) before
12.30 pm on Thursday 20 November 2025.
A member may terminate a proxy’s authority at any time before
the commencement of the Meeting. Termination must be
provided in writing and submitted to the Company’s registrar.
In accordance with the Company’s articles of association,
indetermining the deadline for receipt of proxies, no account
shall be taken of any part of a day that is not a working day.
7. Communication with the Company
Members may not use any electronic address provided either
in the Notice or any related documents (including the Form of
Proxy) to communicate with the Company for any purpose
other than those expressly stated.
Notice of Annual General Meeting
The European Smaller Companies Trust PLC Annual Report 2025
91
8. Electronic receipt of proxies
To appoint one or more proxies or to give an instruction to a
proxy (whether previously appointed or otherwise) via the
CREST system, CREST messages must be received by the
Company’s agent (ID number RA19) no later than the deadline
specified in note 6. For this purpose, the time of receipt will be
taken to be the time (as determined by the timestamp
generated by the CREST system) from which the issuer’s
agent is able to retrieve the message. The Company may treat
as invalid a proxy appointment sent by CREST in the
circumstances set out in Regulation 35(5)(a) of the
Uncertificated Securities Regulations 2001.
Instructions on how to vote through CREST can be found on
the website www.euroclear.com.
If you are an institutional investor you may be able to appoint
aproxy electronically via the Proxymity platform, a process
which has been agreed by the Company and approved by the
registrar. For further information regarding Proxymity, please
go to www.proxymity.io. Your proxy must be lodged by
12.30pm on 20 November 2025 in order to be considered
valid. Before you can appoint a proxy via this process you will
need to have agreed to Proxymity’s associated terms and
conditions. It is important that you read these carefully as you
will be bound by them and they will govern the electronic
appointment of your proxy.
9. Questions at the Meeting
Any member attending the Meeting has the right to ask
questions. Section 319A of the Act requires the directors to
answer any question raised at the annual general meeting
which relates to the business of the Meeting, although no
answer need be given:
(a) if to do so would interfere unduly with the proceedings of
the Meeting or involve disclosure of confidential information;
(b) if the answer has already been given on the Company’s
website; or
(c) if it is undesirable in the best interests of the Company or
the good order of the Meeting that the question be
answered.
By attending the Meeting, members and their proxies and
representatives are understood by the Company to have
agreed to receive any communications relating to the
Company’s shares made at the Meeting.
10. Documents available for inspection
Copies of the directors’ letters of appointment may be
inspected at the registered office of the Company during
normal business hours on any day (with the exception of
Saturdays, Sundays and public holidays) and will be available
at the annual general meeting from 15 minutes prior to the
commencement of the Meeting until its conclusion. No
director has a contract of service with the Company.
11. Member’s right to include a resolution at
theAGM
Under sections 338 and 338A of the Act, members who
satisfy the threshold requirements in those sections have the
right to require the Company: i) to give, to members entitled to
receive the Notice of Meeting, notice of a resolution which
may properly be moved and is intended to be moved at the
Meeting; and/or ii) to include in the business to be dealt with
at the Meeting any matter (other than a proposed resolution)
which may be properly included in the business. A resolution
may properly be moved or a matter may properly be included
in the business unless: a) it would, if passed be ineffective
(whether by reason of inconsistency with an enactment of the
Company’s constitution or otherwise; (b) it is defamatory of
any person; or (c) it is frivolous or vexatious.
Such a request may be in hardcopy or electronic form, must
identify the resolution of which notice is to be given or the
matter to be included in the business, must be authenticated
by the person or persons making it, must have been received
by the Company no later than the date on which this Notice is
given and must be accompanied by a statement setting out
the grounds for the request.
12. Members’ statement of audit concerns
Section 527 of the Act allows members who meet the
threshold requirements of that section to require the Company
to publish a statement on its website setting out any matter
relating to: i) the audit of the accounts to be laid at the meeting
(including the auditor’s report and the conduct of audit); or ii)
any circumstances connected with the auditor ceasing to hold
office since the last meeting at which annual accounts and
reports were laid in accordance with section 437 of the Act.
This is known as a ‘members’ statement of audit concerns’.
Ifsuch a request is received the Company cannot require
those members requesting publication of the statement to
meet its costs of complying with that request. The Company
must also forward a copy of the statement to the auditor at
the same time that it makes it available on the website. Where
a members’ statement of audit concerns is received it will be
included in the business of the meeting at which the accounts
are laid.
13. Website
A copy of this Notice, including the information required
bysection 311A of the Act, is available from the website,
www.europeansmallercompaniestrust.com.
14. Total voting rights
At 17 October 2025 (being the last practicable date prior to
the publication of this Notice) the total number of shares in the
Company was 410,375,045 excluding 51,733,676 ordinary
shares held in treasury. The voting rights are therefore
358,641,369.
Notice of Annual General Meeting
The European Smaller Companies Trust PLC Annual Report 2025
92
The European Smaller Companies Trust PLC Annual Report 2025
Strategic Report
Performance highlights 1
Why invest? 2
Chairman’s statement 4
Fund Manager’s report 7
Portfolio information 11
Historical information 12
Business model 13
Managing risks 17
Responsible investment 19
Key Performance Indicators 23
Governance
Board of Directors 26
Corporate Governance Report 28
Audit Committee Report 34
Management Engagement Committee
Report 36
Nomination and Remuneration
Committee Report 37
Directors’ Remuneration Report 39
Directors’ Report 43
Statement of Directors’ Responsibilities 45
Financial Statements
Independent auditor’s report 47
Financial statements 55
Notes 59
Additional information
Investment portfolio 78
Alternative performance measures 81
Glossary 83
General shareholder information 84
Service providers 85
Notice of Annual General Meeting 86
Our purpose is to deliver a long-term sustainable return
to shareholders from investing in smaller and medium sized
European companies.
Front cover:
ZEISS
Percentage of portfolio: 0.8%
Geographical area: Germany
Manufacturer of optical systems
andoptoelectronics.
7
The European
Smaller
Companies
Trust PLC
Annual Report 2025
JHI9228/2025The European Smaller Companies Trust PLC – Annual Report 2025
The European Smaller Companies Trust PLC
Registered as an investment company in England and Wales
Registration Number 2520734
Registered office: 201 Bishopsgate, London EC2M 3AE
SEDOL/ISIN number: Ordinary Shares: BMCF868/GB00BMCF8689
London Stock Exchange (TIDM) Code: ESCT
Global Intermediary Identification Number (GIIN): JX9KYH.99999.SL.826
Legal Entity Identifier (LEI): 213800N1B1HCQG2W4V90
Telephone: 020 7818 1818
Email: ITSecretariat@janushenderson.com
www.europeansmallercompaniestrust.com
JHI9228/2025Typeset by 2112 Communications, London. Printed by Paragon Leycol.
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