Telephone: 020 7818 1818
Email: itsecretariat@janushenderson.com
www.europeansmallercompaniestrust.com
The European Smaller Companies Trust PLC
Registered as an investment company in England and Wales
Registered office
201 Bishopsgate, London EC2M 3AE
SEDOL/ISIN number
Ordinary Shares:
BMCF868/GB00BMCF8689
Registration Number
2520734
London Stock Exchange
(TIDM) Code
ESCT
Global Intermediary
Identification Number (GIIN)
JX9KYH.99999.SL.826
Legal Entity Identifier (LEI)
213800N1B1HCQG2W4V90
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The European Smaller
Companies Trust PLC
Investing in the growth potential
of European companies
Annual Report 2026
The European Smaller Companies Trust PLC – Annual Report 2026
Contents
Strategic report
1 About us
2 Investing in the growth potential of
European companies
3 Why Europe’s smaller companies?
4 How we build the portfolio
5 Our manager: Janus Henderson Investors
6 Performance summary
8 Chairman’s statement
10 Fund manager’s report
13 Spotlight on the top ten holdings
14 Portfolio exposures
15 Key performance indicators (KPIs)
16 Business model
24 Our principal risks
26 Assessing our viability
Governance
28 Board of Directors
30 Fund management team
31 Corporate Governance report
37 Audit Committee report
40 Management Engagement Committee
report
42 Nominations Committee report
44 Directors’ Remuneration report
47 Directors’ report
49 Statement of directors’ responsibilities
Financial statements
51 Independent auditor’s report to
the members
59 Statement of Comprehensive Income
60 Statement of Changes in Equity
61 Balance Sheet
62 Statement of Cash Flows
63 Notes to the financial statements
Additional information
83 Portfolio holdings
86 Alternative performance measures
88 Historic performance and regulatory
disclosures
89 Service providers
90 Glossary
AGM notice
92 Notice of Annual General Meeting
Shareholder information
www.europeansmallercompaniestrust.com
Annual General Meeting (AGM)
The Board invites you to attend the AGM at 12.30 pm on
16 November 2026 either in person or online.
Scan the QR code for more details and to register
your attendance.
Keeping in touch
Scan the QR code to receive the latest Company updates,
market insights, event invitations and more.
Please send any general enquiries about the Company to
itsecretariat@janushenderson.com.
Warning to shareholders
Many companies are aware that their shareholders may receive 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 to be 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 it is 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 of investment ‘advice’. You can also check the FCA Warning List at
#BeScamSmart – www.fca.org.uk/scamsmart.
Key dates
Dividend payment dates for the year ending 30 June 2027
Ex-dividend date Record date Payment date
1st interim dividend 29 October 2026 30 October 2026 3 December 2026
2nd interim dividend 28 January 2027 29 January 2027 26 February 2027
3rd interim dividend 29 April 2027 30 April 2027 28 May 2027
4th interim dividend 29 July 2027 30 July 2027 3 September 2027
Financial calendar
Annual General Meeting 16 November 2026 at 12.30 pm
Half-year results 31 December 2026 (published in February/March 2027)
Financial results 30 June 2027 (published in October 2027)
Annual Report
for the year ended 30 June 2026
About us
We invest in smaller and medium
sized companies across Europe,
seeking long-term capital growth.
This part of the market contains many
innovative and entrepreneurial businesses
that are less widely researched than larger
companies. Through active selection and
extensive company research, we aim to
uncover opportunities capable of delivering
attractive long-term returns.
Alongside capital growth, the Company aims
to provide a regular income through
quarterly dividends.
Europe’s most exciting growth opportunities are often found
beyond the headline names.
The European Smaller Companies Trust invests in a diverse
portfolio of smaller and medium-sized companies across
Europe, seeking to identify tomorrow’s successful businesses
before they become widely recognised.
Our aim is to build a portfolio
of Europe’s next generation of
growth businesses, combining
long-term opportunity with
valuation discipline.
See p.10 Fund manager’s report
Ollie Beckett
Fund Manager
Investment returns are delivered
through a combination of long-term
capital appreciation and quarterly
dividends, with an annual dividend
target of 5% of NAV.
Strategic
report
Financial
statements
Additional
information
AGM notice
Governance
Strategic
report
Shareholder
information
1
The European Smaller Companies Trust PLC Annual Report 2026
The European Smaller Companies Trust PLC
Finding opportunity in Europe’s hidden growth engines
Germany
23.2
Sweden
20.0
France
11.3
Spain
8.6
Netherlands
8.0
Switzerland
7.0
Austria
3.9
Belgium
3.0
Norway
2.6
United Kingdom
2.5
Denmark
2.4
Italy
2.1
Finland
1.8
Greece
1.5
Luxembourg
1.2
Portugal
0.5
Bulgaria
0.4
30 June 2026 %
Investing in the growth potential of European companies
1 At any given time, over 75% of the portfolio is expected to be invested in companies which are quoted, domiciled, listed or have operations in Europe
2 Calculated using the methodology prescribed by the AIC. The ongoing charge including the performance fee is 0.76% (2025: 0.93%)
3 Based on the total dividend of 8.43p per share and the closing share price of 234.00p per share at 30 June 2026
4 The ongoing charge and dividend yield are alternative performance measures. These are explained on pages 86 and 87
Source: Janus Henderson Investors. A glossary of terms is included on page 90
Investment Objective
The Company seeks capital growth by investing predominantly in smaller and
medium sized companies which are quoted, domiciled, listed or have operations
in Europe
1
.
Portfolio holdings
125
Investment focus
Growth
Regional focus
Europe
See p.83 Portfolio holdings
Ongoing charges
4
0.66%
2
For the year ended
30 June 2026
2025: 0.68%
Net assets
£863m
As at 30 June 2026
2025: £511m
Dividend yield
4
3.6%
3
As at 30 June 2026
2025: 2.3%
2
The European Smaller Companies Trust PLC Annual Report 2026
Why Europe’s smaller companies?
A large, under-researched universe with powerful structural tailwinds
Europe’s small-cap market represents a broad opportunity set where active management can add value through
deep research and disciplined stock selection.
More companies. Less analyst coverage.
Greater opportunity for active management
vs
European large caps
403 companies
Market cap >£5bn
19 analysts
1,311
European small-cap companies
Market cap £100m to £5bn
6
Average number of sell side analysts
Covering each stock
Why this matters for investors
Greater opportunity set
Larger universe of small cap
companies which are less well
covered by analysts meaning a
greater opportunity to find
mispriced securities.
Attractive valuation
Valuation gap between European
small cap companies and their
large cap peers is close to historic
extremes meaning greater
potential for upward re-rating.
Active management advantage
Lower analyst coverage and
market inefficiencies create fertile
ground for active managers to
add value.
Powerful structural growth drivers in Europe
Digitalisation
Europe continues to
invest heavily in digital
infrastructure, cloud
computing, cybersecurity,
semiconductors,
automation and AI
adoption which is enabling
digital transformation
across all sectors.
Energy transition
Electrification, grid
infrastructure and energy
efficiency are underpinning
the transition to a more
sustainable and resilient
economy. The EU’s Clean
Industrial Deal is explicitly
designed to use
decarbonisation as a
source of industrial growth
and competitiveness.
Strategic autonomy
The EU is actively pursuing
greater industrial
resilience and domestic
production capacity with
the aim of reducing
dependence on external
suppliers for energy,
semiconductors, defence
equipment and critical
minerals.
Defence
Rising European
investment in security and
defence capability is
creating long-term
opportunities for domestic
suppliers.
Strategic
report
Financial
statements
Additional
information
AGM notice
Governance
Strategic
report
Shareholder
information
3
The European Smaller Companies Trust PLC Annual Report 2026
Source: Janus Henderson Investors
How we build the portfolio
Rather than focusing on a single investment style, we look for the most compelling opportunities across Europe’s smaller
companies. By investing in businesses at different stages of their development, we can build a diversified portfolio based on
each company’s individual merits and long-term potential.
~47%
of the portfolio is invested in companies below
€1bn free float market capitalisation
1
.
True exposure to Europe’s smaller companies
where inefficiencies are greatest.
1 Based on free-float market capitalisation at 30 June 2026
We invest wherever we find value
Different opportunities emerge at different stages of a company’s development, but the common thread is the
potential to generate attractive returns on invested capital.
A portfolio built from companies at different stages of their journey
1
Early Growth
2
Quality Growth
3
Mature
4
Turnaround
Emerging
businesses
investing for future
expansion.
Potential returns not yet
fully reflected by the
market.
Established
businesses with
proven competitive
advantages.
Competitive advantages
may support strong
returns on invested
capital.
Cash-generative
businesses with
operational
discipline.
Strong cash generation
can support long-term
value creation.
Businesses
undergoing
significant
change.
Potential for improving
returns as positive
change may unlock
value.
Our investment principles
Bottom-up stock selection
In-depth company research to
uncover high-quality businesses
with attractive risk/reward profiles.
Valuation discipline
We seek to invest where the
market price does not fully reflect
long-term business potential.
Risk aware
Portfolio construction focuses
on balance and diversification
to manage risk without diluting
opportunity.
A true small cap offering
Portfolio breakdown by market capitalisation
1
.
12.5%
£5b - £10b
6.4%
< £250m
8.9%
£250m - £500m
31.7%
£500m - £1b
12.7%
£3b - £5b
27.8%
£1b - £3b
4
The European Smaller Companies Trust PLC Annual Report 2026
Our manager: Janus Henderson Investors
A specialist investment trust manager with global resources
Janus Henderson Investors manages £400bn of client assets globally
and has a long heritage in investment trusts. Henderson’s origins lie in
managing investment trusts, and today the firm remains one of the
UK’s largest and most experienced investment trust managers.
The Company benefits from this specialist expertise, alongside the
resources of a global active investment business.
Why this matters
Assets under
management
£400bn
Employees
2,000+
Global offices
27
Investment
professionals
350+
Source: Janus Henderson Investors as at
30 June 2026
Investment trust expertise
Janus Henderson Investors has
managed investment trusts for more
than 90 years and is one of the largest
and most experienced investment
trust managers in the UK.
European small cap equities capability
A dedicated European equities team
provides on-the-ground research and
extensive access to companies
across Europe.
Global resources
The Company benefits from the depth
of a global platform including
research, risk management,
governance and operational support.
Strategic
report
Financial
statements
Additional
information
AGM notice
Governance
Strategic
report
Shareholder
information
5
The European Smaller Companies Trust PLC Annual Report 2026
Performance
Total return performance
Performance summary
Year to 30 June 2026
Total return performance to 30 June 2026
1 year % 3 years % 5 years % 10 years %
NAV
1, 6
16.8 49.9 37.7 235.7
Share price
2, 6
15.3 68.0 46.9 290.9
MSCI Europe ex UK Small Cap Index (the benchmark)
4
12.4 41.1 28.4 156.9
AIC European Smaller Companies sector
5
11.8 45.2 28.0 200.3
Open-ended fund sectors:
IA European Smaller Companies sector
9.2 33.9 14.7 120.3
EAA Fund Europe Small Cap Equity sector
6.5 21.9 0.9 93.9
Total return performance
4,5
%
1 Net asset value (‘NAV’) total return performance with dividends reinvested
2 Share price total return using closing price
3 Calculated using the NAV and closing share price at year end
4 All indices are sterling adjusted and rebased to 100
5 Sector comprises only three constituents
6 The NAV total return, share price total return, NAV per share, discount and ongoing charge are alternative performance measures. These are explained in
more detail on pages 86 and 87
Sources: Morningstar Direct, Janus Henderson Investors. A glossary of terms is included on page 90
This indicates a key performance indicator (‘KPI’). KPIs are used to measure the success of your Company in meeting its
objective and by the directors in evaluating the fund management team. See page 15.
2016 2017 2018 20262025202420232022202120202019
Share price
2, 6
NAV
1, 6
MSCI Europe ex UK Small Cap Index (benchmark)
4
100
150
200
250
300
350
400
Discount
at year end
3
7.3%
(2025: 5.8%)
NAV per share
at year end
252.42p
(2025: 224.45p)
NAV
total return
1
16.8%
(2025: 14.5%)
Share price
total return
2
15.3%
(2025: 21.9%)
Share price
at year end
234.00p
(2025: 211.50p)
6
The European Smaller Companies Trust PLC Annual Report 2026
See p.10 Fund manager’s report
Performance summary continued
Dividend performance
Total dividend
1
Per share for the year
8.43p
(2025: 4.90p)
Dividend yield
2
At the end of the year
3.6%
(2025: 2.3%)
Total return
Per share
35.82p
(2025: 24.02p)
1 Based on the three financial quarters in the year ended 30 June 2026, following the adoption of the new dividend policy on 15 October 2025
2 Based on the dividends declared in respect of the year ended 30 June 2026 of 8.43p per share and the closing share price of 234.00p per share
3 The new dividend policy was implemented in October 2025 on completion of the combination with European Assets Trust PLC
Sources: Morningstar Direct, Janus Henderson Investors
Dividend policy
On 15 October 2025, the Company adopted a new policy targeting 5% of
the NAV per share as at the previous year end.
Year ended 30 June 2026
Based on the three financial quarters since the policy was introduced, a
total dividend of 8.43p per share was paid in respect of the year ended
30 June 2026, resulting in a yield of 3.6%.
Year ending 30 June 2027
Based on the full financial year of four quarters, the prospective total
dividend will be 12.64p per share, resulting in an indicative yield of 5.4%
based on the NAV per share as at 30 June 2026.
Total dividend per year
Pence per share
2025 202720262017 2018 2019 2020 2024202320222021
0
3
6
9
12
15
1.81p
2.38p
2.75p 2.76p
3.13p
4.35p
new dividend policy introduced
4.70p
4.80p
4.90p
12.64p
8.43p
Dividend yield
1 year yield
ESCT
3 year average yield 10 year average yield5 year average yield
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
IA European Smaller Companies sector EAA Fund Europe Small Cap Equity sector
3.60
1.60
1.95
2.87
1.50
2.40
3.21
1.50
2.60
2.60
1.20
2.20
Strategic
report
Financial
statements
Additional
information
AGM notice
Governance
Strategic
report
Shareholder
information
7
The European Smaller Companies Trust PLC Annual Report 2026
James Williams
Chairman
Highlights of the year
NAV per share at year end
252.42p
(2025: 224.45p)
Share price at year end
234.00p
(2025: 211.50p)
Dividend for the year
1
8.43p
(2025: 4.90p)
Dividend yield at 30 June 2026
3.6%
(2025: 2.3%)
Chairman’s statement
Dear Shareholder,
I am pleased with how the Company has navigated
what has proved to be another eventful year.
We successfully combined with European Assets Trust PLC
(‘EAT’) and welcomed two new Board members, with
Kate Cornish-Bowden and Stuart Paterson joining from
the Board of EAT.
Following the combination, we are now the largest
constituent of the AIC European Smaller Companies sector,
with the second highest dividend yield across closed-end
funds with a European focus, both small and large-cap.
We believe this broadens the Company’s appeal to
investors and is the result of our decision to adopt a new
policy targeting a minimum total dividend of 5% of the NAV
per share as at the previous year end. The attractive yield
complements the strong, long-term performance where
the fund management team have outperformed the
benchmark over 1, 3, 5 and 10 years. Shareholders have
further benefited from a reduced ongoing charge of
0.66%
2
, which was achieved through negotiating a
reduction in the management fee.
Beyond your Company, geopolitical events have caused
further bouts of market volatility. The US/Israeli war with
Iran has resulted in instability in the energy market and
fears of supply chain challenges, fears that have not yet
fully manifested, but have also not fully dissipated.
The extraordinary development of Artificial Intelligence (‘AI’)
and the capital expenditure boom to deliver it has had a
dramatic effect on stock prices and consequently influenced
the best and worst performing stocks in the portfolio.
All in all, it has been a busy period for your Company and I
am grateful that our fund managers have once again
delivered strong performance.
The extraordinary development of
Artificial Intelligence (‘AI’) and the
capital expenditure boom to deliver
it has had a dramatic effect on
stock prices and consequently
influenced the best and worst
performing stocks in the portfolio.
Performance
The NAV total return for the year to 30 June 2026 was
16.8%, comfortably ahead of the benchmark return of
12.4%. This maintains the fund managers’ consistent
five-year track record to 30 June 2026, with a NAV total
return of 37.7% against the benchmark of 28.4%, and even
more impressively, the ten-year track record of 235.7%
against the benchmark of 156.9%.
The share price total return over the year to 30 June 2026,
was 15.3%.
1 Based on the three financial quarters in the year ended 30 June 2026, following the adoption of the new dividend policy on 15 October 2025
2 Ongoing charge ratio excluding the performance fee, 0.76% including the performance fee
8
The European Smaller Companies Trust PLC Annual Report 2026
Dividend policy
The Board introduced a new dividend policy following the
completion of the combination with EAT in October 2025.
The policy was applied for the final three quarters of the
Company’s financial year ending 30 June 2026,
delivering a total dividend of 8.43p per share. Under the
policy we intend to pay quarterly interim dividends
totalling at least 5% of the NAV per share as at the
preceding financial year end. As we progress through
the next two quarters, the dividend yield on the
Company will expand to this level as we annualise the
new policy.
On 3 July 2026, we announced the prospective total
dividend for the year ending 30 June 2027 of 12.64p per
share. We anticipate paying this across four interim
dividends, each of 3.16p per share in November 2026
and February, May and August 2027.
Many retail share dealing platforms such as AJ Bell,
Hargreaves Lansdown, Interactive Investor and many more,
offer the ability to automatically reinvest dividends. We
would encourage shareholders to make use of this facility.
Discount management and share
buyback
In January 2025, we introduced a mid-single digit target
for the discount at which the Company’s shares trade
compared to its NAV in normal market conditions. In the
financial year ended 30 June 2026, we bought back
16.8m shares, returning over £36.7m to shareholders.
The discount ranged from 5.1% to 10.4%, reflecting appetite
generally for equities during a heightened period of
geopolitical tensions. The discount at 30 June 2026 was
7.3%, comparable to peers in the AIC sector.
The Board believes that the enhanced dividend policy,
ongoing share buybacks and the marketing programme
should work to support a further narrowing of the
discount notwithstanding the background of volatile
stock market events.
Annual General Meeting
The 36th Annual General Meeting (‘AGM’) will be held at
12.30 pm on Monday, 16 November 2026 at the offices of our
investment manager at 201 Bishopsgate, London, EC2M 3AE.
The AGM is a great opportunity for shareholders to hear
first-hand from the fund manager and to pose questions
to the directors and the fund management team.
I encourage as many shareholders as possible to join us
at the AGM to vote on the resolutions under consideration,
or to complete their proxy form ahead of the meeting.
The voting results help inform the Board of shareholder
sentiment on some of our key strategic approaches such
as the quarterly dividend and appetite to buy back shares.
For those wishing to attend, but unable to travel, the event
will be streamed live via the internet, although
shareholders will not be able to vote via this medium.
Outlook
Since 2024 global stock markets have experienced
significant disruption, whether geopolitical or driven by the
extraordinary transformation brought about by the advent
of AI. Neither seem likely to go away anytime soon,
whether that be the ongoing development of AI or more
local changes in Europe such as potential German
economic stimulus or upcoming elections in France.
We believe that European smaller companies are well
placed to benefit from these changes. A number of
companies in the European technology sector are critical
to the AI roll-out and provide exciting investment
prospects for our fund managers. Beyond this, European
companies lead in many other niche sectors, as our fund
managers’ highlight in their report. Valuations remain
compellingly attractive across smaller companies versus
larger companies and there are many opportunities for
our fund managers to invest in. We believe the Company
remains well placed to continue delivering value for
shareholders over the long term.
James Williams
Chairman
29 September 2026
Chairman’s statement continued
Annual General Meeting (AGM)
The Board invites you to attend the AGM at 12.30 pm
on 16 November 2026 either in person or online.
Scan the QR code for more details and to register
your attendance.
Strategic
report
Financial
statements
Additional
information
AGM notice
Governance
Strategic
report
Shareholder
information
9
The European Smaller Companies Trust PLC Annual Report 2026
The Board introduced a new
dividend policy following the
completion of the combination
with EAT.....we intend to pay
quarterly interim dividends
totaling at least 5% of the NAV
per share as at the preceding
financial year end.
Highlights of the year
NAV total return
16.8%
(2025: 14.5%)
Benchmark
1
total return
12.4%
(2025: 14.0%)
• The second half of the year was
characterised by an AI-driven market
euphoria followed by a sharp correction.
Combined with the US and Israel’s war in
Iran, this kept markets volatile.
• We benefited from our exposure to several
businesses aligned with AI infrastructure
investment, yet several holdings were
adversely affected by perceptions that
they faced disruption from AI, as the
market often applied the ‘AI winner’
and ‘AI loser’ labels indiscriminately.
Fund manager’s report
Introduction
The financial year ended 30 June 2026 was a positive one
for European smaller companies. The first half was shaped
by a capricious US tariff policy, which weighed on
corporate decision-making, a sluggish Chinese economy
attempting to reignite growth through aggressive export-
led stimulus and increasing scepticism over the German
government’s ability to deliver its promised infrastructure
investment programme. The second half brought a very
different set of challenges and opportunities,
characterised by first an AI-driven market euphoria,
followed by a sharp correction, and culminating in the US
and Israel’s conflict with Iran, which led to the temporary
blockade of the Strait of Hormuz. Against this backdrop,
markets experienced significant volatility throughout the
year. Despite these headwinds, the Company delivered a
return of 16.8%, compared with 12.4% for the benchmark,
resulting in outperformance of 4.4%.
Although tariffs, elections and geopolitical conflict
provided a volatile backdrop, the dominant investment
theme of the year was the market’s rapidly strengthening
belief in the transformative potential of AI. From February
onwards, investors increasingly viewed the market
through a binary lens of ‘AI winners’ and ‘AI losers’,
frequently overlooking the nuances of individual business
models and competitive positions. This environment
created both opportunities and challenges for the
portfolio. We benefited from our exposure to several
businesses aligned with AI infrastructure investment,
yet several holdings were adversely affected by
perceptions that they faced disruption from AI. In our view,
the market often applied these labels indiscriminately,
rewarding some companies while penalising others with
limited regard for the durability of their franchises or the
strength of their underlying fundamentals.
AI - the winners and losers
Within the ‘AI winners’ German listed semiconductor
equipment producer of lithography, wafer bonding and
photomask processing tools, SUSS MicroTec, was a
substantial contributor to performance. The tools
produced by SUSS MicroTec are used for the wafer-
bonding and advanced packaging equipment used in
the high-bandwidth memory and chiplet architectures
that underpin AI accelerators and GPUs. In lay terms SUSS
MicroTec provides the equipment used to make the
brains behind AI computers. Other notable AI winners
include Norwegian listed Smartoptics that provides
optical networking solutions and devices being used in
datacentres using their high-speed fibre optic links to
move data between servers and sites. German listed PVA
TePla makes metrology machines used to inspect the
advanced semiconductor chips that power AI systems.
German listed Aixtron sells the specialist equipment used
to make the power semiconductors and optical chips
that help AI datacentres run more efficiently and move
data at higher speeds. ams-OSRAM provides laser and
photonics components that also helps data move
between AI chips and servers more efficiently. German
listed PFISTERER provides the high-voltage cable
connection technology needed in the grid to meet the
power demands of datacentres.
Ollie Beckett
Fund Manager
1 MSCI Europe ex UK Small Cap Index
10
The European Smaller Companies Trust PLC Annual Report 2026
The ‘AI losers’ in the portfolio that hurt performance include
Swedish listed provider of legal information services
Karnov. The shares took a precipitous lurch down in
February after Anthropic launched a legal workflow
processing module for their Claude AI model. We
underestimated the risk of the stock being labelled as an
AI loser because Karnov owns the data being used in its
markets and has developed and launched its own AI tools
that it is already selling to its clients in Sweden and
Denmark. Given the proprietary data, in-house AI tools
and substantial cash return programme from the
company we have persevered with our position but are
monitoring it closely. German listed provider of web
hosting and cloud service solutions, IONOS, was also
labelled an AI loser and burdened the portfolio. The
AI loser thesis revolved around the idea that AI would
disintermediate the use of websites and that companies
would no longer bother to have them and thus host them
on IONOS’s datacentres. We find this argument
unconvincing. Company websites are the shop window
to the world, and we don’t anticipate their demise any time
soon. IONOS are actively selling AI tools to small businesses
in their markets and in due course we expect it to shed the
AI loser label. German listed provider of IT consulting
services, Adesso, has also suffered under the AI loser label.
The capacity of the AI models to provide computer coding
skills has meaningfully lowered the cost of providing
software and technology know how which might reduce
the need for consultants, lower day rates and perhaps
drive insourcing. As it currently stands customers seem
to be asking for more help as they wrestle with how to
benefit from AI within their businesses. We have held on
to the position but with added scrutiny. Spanish listed HBX,
that provides a cloud-based technology platform to link
travel companies and hotels suffered from being seen
as an AI loser, whilst also seeing a decline in US travel after
tariff announcements and then later in the Middle East
after the war in Iran started. We believe that its deep
database and proprietary data means it is well positioned
to take advantage of the changes AI will deliver.
The portfolio
Outside the AI theme, other stocks that contributed
positively to performance include German listed producer
of automotive semiconductors, Elmos Semiconductor
(‘Elmos’). Elmos manufactures sensors that make cars
safer, smarter and more comfortable. Cars are
increasingly becoming mobile computers and Elmos is
seeing fast growth as their products become more
intensively used by global automotive original equipment
manufacturers. We believe Elmos remains well positioned
for increasing semiconductor content within advanced
driver assistance and autonomous vehicle applications.
Elmos also has a number of clients in the humanoid robot
sphere. Intriguingly the shares have correlated with the AI
winners, though their products are not directly impacted
by the AI capex theme.
UK listed IG Group, the provider of a global online trading
platform that enables retail investors to trade financial
markets, saw strong customer growth and strong trading
that helped drive the stock’s rerating. Swedish listed Acast,
that provides a global podcast platform used by creators
to host, distribute and monetise their podcasts by
connecting them with advertisers and audiences
continued to drive strong topline growth and delivered
good performance for the trust. Swedish listed online
department store, Boozt, has had strong performance as
the Swedish consumer recovery begins to materialise.
Other detractors include German listed Stroeer, the
leading operator of billboards and digital advertising
screens in Germany. They had a tough set of comparative
numbers after a strong 2024 and as bid speculation fell
away. Swedish listed Lindab, that turns sheet metal into
ventilation products and building profile business that
makes products like wall cladding and rainwater systems
has missed forecasts as the Profile business is exposed to
new-build construction that has remained soft in Sweden.
Swedish listed Bonava, that builds houses in Sweden and
parts of northern Europe, endured weak trading for the
same reason. German listed forklift manufacturer
Jungheinrich performed poorly due to weak end markets,
having to close its Russian subsidiary and a strike at its
main production plant.
The portfolio carried a substantial
Information Technology
overweight in the period. This
allocation effect, combined
with strong stock selection,
drove the performance of the
portfolio in the period.
Geographical and sector distribution
The portfolio carried a substantial Information Technology
overweight in the period. This allocation effect, combined
with strong stock selection, drove the performance of the
portfolio. Other positive IT contributors include Swiss-listed
provider of geolocation technology u-blox, which was
acquired by Advent International; Swiss-listed Inficon,
which produces vacuum instruments to monitor and
control production processes, also did well. Swedish-listed
distributor of printed circuit boards NCAB and Swedish-
listed producer of semiconductor equipment Mycronic,
also contributed positively.
The portfolio was mildly underweight Financials, but stock
selection made for a strong contribution to returns in the
period. Exposure to southern European banks such as
Banco Comercial Portugues in Portugal, and Alpha Bank,
CrediaBank and Optima in Greece, delivered good
returns for the portfolio. Our positions in German listed
retail trading platform, flatexDEGIRO and Dutch wealth
manager Van Lanschot Kempen also did well.
Fund manager’s report continued
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The European Smaller Companies Trust PLC Annual Report 2026
Conversely poor stock selection in Industrials weighed on
performance with names such as Norwegian listed
producer of reverse vending machines, Envipco,
struggling as governments shifted decisions to later time
periods for bringing in legislation mandating the use of
machines for collecting deposits on plastic bottles.
German listed defence equipment manufacturer RENK
burdened the portfolio in the period. Our underweight
position in Energy further weighed on performance after
the price of oil and gas spiked following the closure of the
Strait of Hormuz.
The portfolio remains heavily overweight Germany with a
mixture of domestic exposure such as IT service and
equipment provider, Bechtle, and more internationally
focused stocks such as specialty chemical producer of
creatine and nitroguanidine, Alzchem. The travails of the
German economy are widely advertised with significant
challenges in the automotive sector weighing on the
economy. The prejudices about this market have created
the opportunity to buy some great businesses at great
prices. We have also built an overweight position in
Sweden. Swedish small cap has been facing significant
outflows following a period of weak performance and the
consolidation of Swedish public pension providers has
created some forced selling of Swedish smaller
companies. We have taken advantage of this period of
dislocation to build positions in some mispriced
companies. We opened a position in Swedish housebuilder
JM as we see a housing recovery coming in Stockholm
and expect the rest of Sweden to follow suit. We invested in
Asmodee, a leading provider of board games and trading
cards such as Pokémon. Other new positions in Sweden
include organ transplant technology company, XVIVO,
leading manufacturer of bike racks, cargo carriers and
hitch solution for vehicles, Thule, and software provider for
cancer radiation therapy RaySearch Laboratories.
We have large underweights in Italy, Switzerland and
Norway where we struggle to find attractively valued
companies.
Other purchases
We started a position in German listed provider of
children’s storytelling entertainment products, Tonies.
As part of our integration of EAT, we inherited a position in
Danish bank, Ringkjobing Landbobank that we have
maintained. We took part in initial public offerings for
Finnish provider of office pods, Framery, and Austrian
truck mounted crane business, Palfinger.
Other disposals
We exited our position in Spanish credit insurer, Grupo
Catalana Occidente, which was taken private by the
controlling family. Irish hotelier, Dalata, was also taken
private as was Hellenic Exchanges, the Greek stock
exchange and German branded pharmaceutical company,
Dermapharm, was de-facto bought by the founder.
Despite the frequent assertions
to the contrary, Europe has a
thriving technology sector,
much of which resides in the
smaller company arena and is
benefiting from booming orders
as huge AI capex spending
comes through from the US
technology majors.
Currency
The Company is denominated in sterling, while investing in
largely euro-denominated assets. We do not hedge this
currency exposure.
Outlook
Recent years have seen consistent disruption that has
sucked the momentum out of a European recovery. 2024
had the disruption of UK, French, German and US elections.
2025 had Liberation Day tariffs. 2026 had the start of a war
in the Middle East and the fear of a further energy shock.
Despite the recurring setbacks there are plentiful reasons
for optimism. An energy shock was absorbed by the
global economy with little drama and no spike in inflation.
Indeed, the global economy seems to be growing far less
reactive to the statements coming from the US
administration. German stimulus in defence is coming
through and there is the strong prospect of the
infrastructure spend to follow in 2027. Despite the frequent
assertions to the contrary, Europe has a thriving
technology sector, much of which resides in the smaller
company arena and is benefiting from booming orders as
huge AI capex spending comes through from the US
technology majors. European smaller companies lead in
niches such as industrial automation, specialty chemicals,
medical technology and machine tooling. We operate in a
universe with considerable innovation, robust balance
sheets and attractive valuation. The asset class remains
fundamentally under-owned providing an environment
rich in opportunities. We are firmly focused on deploying
your capital towards undervalued companies with
considerable potential across the entire region.
Ollie Beckett, Rory Stokes and Julia Scheufler
Fund management team
29 September 2026
Fund manager’s report continued
12
The European Smaller Companies Trust PLC Annual Report 2026
Portfolio Information
2026
£’000
Portfolio
%
1. IG Group
IG Group is a UK-based financial technology and online trading company. It provides
platforms that allow retail investors and traders to access financial markets worldwide.
Its main activities include spread betting, contracts for difference, stockbroking and
investing, options and futures trading and cryptocurrency trading and investment services.
23,980 2.5%
2. TKH
TKH Group is a Dutch technology company which develops specialised automation,
electrification and digital connectivity systems for the industrial and infrastructure
markets. Its main activities include smart vision systems, smart manufacturing systems,
such as automated production equipment and industrial automation solutions, and smart
connectivity, which includes the electrification of systems covering fibre-optic, energy and
power cables, subsea cables and similar.
21,171 2.2%
3. flatexDEGIRO
flatexDEGIRO is one of Europe’s largest online brokerage platforms, providing self-directed
investors with low-cost access to stock markets, ETFs, bonds, funds, derivatives and other
securities. The company operates primarily through the DEGIRO, flatex, and ViTrade brands.
17,818 1.9%
4. SUSS MicroTec
SUSS MicroTec is a German semiconductor equipment manufacturer. Rather than making
chips itself, it supplies the highly specialised machines used by semiconductor companies
to manufacture and package chips. Its equipment is used in several critical stages of
semiconductor production such as lithography, wafer bonding, photomask processing
and semiconductor inkjet printing.
17,045 1.8%
5. Elmos Semiconductor
Elmos Semiconductor is a German semiconductor company that specialises in automotive
chips. Unlike companies such as NVIDIA or AMD that focus on computing processors, Elmos
designs application-specific integrated circuits (ASICs) that perform particular functions inside
vehicles. Their principal areas include motor control such as windows and seat adjustments,
lighting, braking and indicators, ultrasonic parking sensors, sensors for pressure, positions and
torque and safety, including airbag systems and power management.
16,943 1.8%
6. Van Lanschot Kempen
Van Lanschot Kempen is a Dutch wealth management and investment banking group.
It focuses on serving wealthy individuals, families, entrepreneurs, charities, family offices
and institutional investors. Its services include private banking, investment management
and investment banking.
15,532 1.6%
7. Stroeer
Stroeer is one of Germany’s largest media and advertising companies. Its core business is
out-of-home advertising which includes billboards, digital screens, posters and
advertising displays in public spaces. It has also expanded into digital media, online
publishing and marketing services.
15,384 1.6%
8. Acast
Acast is a Swedish podcast platform and advertising technology company. It helps
podcast creators host, distribute, measure and monetise their podcasts, while enabling
advertisers to reach podcast audiences. Its services include podcast hosting, podcast
advertising, dynamic advertising insertion and tools for offering subscription and
premium content.
14,528 1.5%
9. Alzchem
Alzchem is a German specialty chemicals company that develops and manufactures
high-value chemical products used in nutrition, agriculture, pharmaceuticals, renewable
energy, defence and industrial applications.
14,401 1.5%
10. Indra Sistemas
Indra Sistemas is a Spanish defence, aerospace, air traffic management, and digital
technology company. It is one of Europe’s leading providers of defence electronics and
mission-critical technology systems, serving governments, militaries, transport operators
and large enterprises worldwide.
14,356 1.5%
Total
171,158 17.9%
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The European Smaller Companies Trust PLC Annual Report 2026
Portfolio exposures
Sector breakdown at 30 June
Regional breakdown at 30 June
2026
%
2025
%
l Industrials
30.3 32.8
l Technology
19.9 15.1
l Consumer Discretionary
18.4 19.9
l Financials
10.6 13.4
l Basic Materials
7.4 6.1
l Health Care
7.4 4.6
l Real Estate
3.4 4.2
l Energy
1.9 2.9
l Utilities
0.4 0.4
l Consumer Staples
0.3 0.6
2
0
2
5
2
0
2
6
2026
%
2025
%
l Germany
23.2 23.2
l Sweden
20.0 13.9
l France
11.3 11.2
l Spain
8.6 8.7
l Netherlands
8.0 9.7
l Switzerland
7.0 9.1
l Austria
3.9 1.8
l Belgium
3.0 3.4
l Norway
2.6 3.4
l United Kingdom
2.5 2.4
l Denmark
2.4 2.0
l Italy
2.1 3.2
l Finland
1.8 1.5
l Greece
1.5 3.7
l Luxembourg
1.2 –
l Portugal
0.5 2.1
l Bulgaria
0.4 –
l Ireland
– 0.7
2
0
2
5
2
0
2
6
14
The European Smaller Companies Trust PLC Annual Report 2026
Key Performance Indicators
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 NAV total return, share price total return and the discount are alternative performance measures. More information on these can be found on pages 86 and 87
In order to measure the success of the Company in meeting its investment objective and to evaluate the performance
of the fund management team, 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, 5
NAV
1, 5
90
95
100
105
110
115
120
125
Jun
2025
Dec
2025
Apr
2026
Jun
2026
Aug
2025
Oct
2025
Feb
2026
5 year
%
60
70
80
90
100
110
120
130
140
150
160
NAV
1, 5
Benchmark
2
Share price
3, 5
Jun
2021
Jun
2022
Jun
2023
Jun
2024
Jun
2025
Jun
2026
NAV total return performance compared to the AIC and open end sectors (rebased to 100)
1 year
90
95
100
105
110
115
120
125
Jun
2025
Dec
2025
Apr
2026
Jun
2026
Aug
2025
Oct
2025
Feb
2026
£
NAV
1, 5
AIC sector
4
IA European Smaller Companies
EAA Fund Europe Small-Cap Equity
5 year
Jun
2021
Jun
2022
Jun
2023
Jun
2024
Jun
2025
Jun
2026
%
70
80
90
100
110
120
130
140
150
NAV
1, 5
AIC sector
4
IA European Smaller Companies
EAA Fund Europe Small-Cap Equity
Discount
5
compared to the AIC sector average
1 year
Company AIC sector
4
-12
-10
-8
-6
-4
-2
0
Jun
2025
Dec
2025
Apr
2026
Jun
2026
Aug
2025
Oct
2025
Feb
2026
%
5 year
Company AIC sector
4
Jun
2021
Jun
2022
Jun
2023
Jun
2024
Jun
2025
Jun
2026
%
-20
-18
-16
-14
-12
-10
-8
-6
-4
-2
0
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The European Smaller Companies Trust PLC Annual Report 2026
Acast
Case studies
Country of listing
Sweden
Proportion of portfolio
1.5%
(as at 30 June 2026)
What does it do?
Acast is the world’s largest pure-play podcast company, hosting over
140,000 shows and serving more than 4,000 advertisers globally. They
generate over one billion listens per quarter and connect podcasters,
listeners, and advertisers, helping creators distribute and monetise
their content.
Our investment case
Podcasts are becoming an increasingly important part of the media
landscape. 55% of Americans are regular listeners and they often
achieve higher credibility scores than traditional forms of media. This
makes podcasts an attractive medium for advertisers to target, yet they
remain under-monetised when compared to other forms of media.
Acast allows us to capitalise on this growth opportunity by investing in
the infrastructure of the industry.
The business model of Acast operates with a flywheel effect. The large
number of podcasters on Acast’s platform draws in advertisers,
improving the payouts earnt from these advertisers, which in turn
attracts even more podcasters. This makes the scale of Acast, as the
market leader, an attractive characteristic in the investment case. The
balance sheet is healthy, with a cash position of SEK 602 million, giving
the company ample room to invest in and further this advantage.
Acast also has opportunities to grow independently to audience size, by
increasing the value that they capture from each ‘listen’. The company
plans to accomplish this by targeting advertisers with greater nuance
and expanding their suite of advertising products.
For the first time last year, Acast delivered positive operating profit and
cash flow. This marked an important milestone, validating the underlying
business model to the wider market and helping position the company
for future growth.
Therefore, with multiple growth avenues helping turn the flywheel, and
profitability beginning to accelerate, we see an attractive long-term
opportunity in our holding of Acast.
16
The European Smaller Companies Trust PLC Annual Report 2026
Country of listing
Germany
Proportion of portfolio
1.8%
(as at 30 June 2026)
What does it do?
Elmos is a fabless semiconductor designer with over 40 years of
experience. They mainly operate in the automotive industry and the
chips they manufacture span five product areas — ranging, sensing,
motor control, lighting and safety – with the company holding the
number one or two position globally in each category.
Our investment case
With the increasing demand for electric vehicles, self-driving features,
and smarter in-car technology, cars today have more semiconductor
chips than ever before. On average, 10 Elmos chips are found in every
new car globally, but that number rises to ~200 in a modern electric
vehicle. As such, the amount of chip content in the average car is
expected to nearly double by 2030. This is a meaningful tailwind for the
company and does not rely upon end market acceleration or gains in
market share – both of which we also hope to see.
Customers have already committed to using Elmos chips in their
upcoming car models, representing €3.3 billion in future orders, which
provides strong visibility over future growth. There is potential upside
from newer markets, such as robotics, which are not currently factored
into the company’s official targets.
Following the sale of its wafer fabrication plant in late 2024, Elmos do not
own or operate their own factories, instead choosing to outsource their
manufacturing. This keeps costs low and reduces the need for future
capital expenditure, achieving a reduction of ~70% of the historical annual
spend so far. This has resulted in much improved cash generation and
should continue to drive profitability in the years to come.
As cash accumulates, the company has committed to returning it to
shareholders via dividends and buybacks. This improves their return on
invested capital and gives us confidence that management’s and
shareholders’ interests are aligned.
Therefore, strong market tailwinds, with exciting areas of optionality, paired
with a more efficient and capital light business model, gives us confidence
that we can earn an attractive return on our investment in Elmos.
Elmos Semiconductors
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Business model
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
as derivatives 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 and investments in cash funds) is limited by
the Board to a maximum 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.
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.
Investment objective
The Company seeks capital growth by investing predominantly in smaller and medium sized companies which
are quoted, domiciled, listed or have operations in Europe
1
.
Purpose
The Company’s purpose is to provide shareholders with a cost-effective means of accessing a professionally
managed portfolio of European smaller companies through a single investment vehicle. As an investment trust, the
Company offers exposure to a diversified range of investments, helping to spread investment risk while benefiting
from active portfolio management.
Day-to-day operations are carried out by established third-party service providers whose performance, service
quality and fee arrangements are subject to ongoing oversight by the Board. The Board is comprised solely of
non-executive directors who are accountable to shareholders and are independent of the investment manager.
The Company’s closed-ended structure enables the portfolio to remain fully invested and allows the selective use
of gearing to enhance potential long-term returns for shareholders.
1 At any given time, over 75% of the portfolio is expected to be invested in companies which are quoted, domiciled, listed or have operations in Europe
18
The European Smaller Companies Trust PLC Annual Report 2026
Business model continued
Investment process
The fund management team employs a bottom-up, valuation-driven investment process focused on identifying
mispriced European smaller companies through extensive fundamental research, management meetings and
quantitative analysis.
The fund management team invests flexibly across the corporate lifecycle, allowing them to pursue opportunities
wherever they find attractive risk-adjusted returns. Portfolio construction emphasises diversification and risk
management, while holdings are continuously monitored and subject to disciplined sell criteria. ESG considerations are
integrated where financially material but do not constrain stock selection.
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
1
quantitative
challenge
Meeting
Management
External
Research
Internal
Research
Seek mispriced
securities
Monitoring and
sell discipline
1 HOLT is a corporate valuation, performance evaluation and portfolio screening framework
Source: Janus Henderson Investors
Proactive idea generation
The fund management team seeks investment opportunities
from multiple sources, including company meetings and
management discussions, internal and external research,
quantitative screening tools, thematic research and the
analysis of market dislocations and valuation anomalies.
The objective is to identify companies whose share prices
do not fully reflect their long-term business potential.
Bottom-up stock selection
The portfolio is constructed using a bottom-up approach,
focusing on individual company fundamentals rather
than macroeconomic forecasts.
The fund management team assesses the business
quality, its competitive position, growth prospects, cash
generation, management quality and valuation.
Valuation discipline
Valuation is central to the process. The fund management
team explicitly seek mispriced securities and invest where
they believe market expectations are inconsistent with
a company’s long-term fundamentals. Position sizing is
influenced by both conviction and valuation attractiveness.
Monitoring and sell discipline
Holdings are continuously reviewed and investments sold
when shares reach fair value estimates, the investment
thesis deteriorates, better opportunities emerge elsewhere
or the risk/reward return becomes less attractive.
Sell discipline is a key element of the process.
ESG integration
The Company does not operate as an ESG-focused
strategy, but the fund management team incorporates
ESG considerations where they are financially material to
the investment case.
Particular emphasis is placed on governance, including
management quality, capital allocation, alignment of
interests and the treatment of minority shareholders,
as these factors are often critical drivers of long-term
value creation.
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The European Smaller Companies Trust PLC Annual Report 2026
Stewardship
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.
We review the 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. The fund management team believe in
engaging with management and boards to resolve issues
of concern rather than to vote against shareholder
meeting proposals. This approach is more likely to be
effective in influencing company behaviour.
In the period under review, we voted at 97.8% 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 61.2% of the meetings at which we voted, at least one
vote was cast against management recommendations.
Responsibility Report
The investment manager 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 the targets for both the investment manager
and the portfolios which they manage. Product-level
metrics include absolute carbon emissions, carbon
footprint, weighted average carbon intensity, implied
temperature rise and climate scenario analysis
(Climate Value at Risk).
The investment manager’s TCFD Report
specific to the Company is available at
www.europeansmallercompaniestrust.com.
Number of meetings
2026 2025
1 Number of votable meetings
139 151
2Number of meetings voted
136 149
3Number of meetings with at least one vote AGAINST
85 91
2026 2025
1
2
3
0 50 100 150
Voting record
Amount %
l Number of votes FOR
2,047 89.0
l Number of votes AGAINST
252 11.0
l Number of votes ABSTAIN
– –
Breakdown of resolutions not supported
During the
year to
30 June 2026
% of
resolutions
l Auditor related
2.8
l Capital issuance or structure
10.3
l Amend articles
0.8
l Director compensation
40.9
l Director election
30.5
l Director related
8.3
l Miscellaneous
0.4
l Non-routine business
0.8
l Routine business
5.2
Business model continued
20
The European Smaller Companies Trust PLC Annual Report 2026
Business model continued
Engagement case study
Sector:
Electrical Equipment
Topic:
Governance and ESG oversight
Geography:
Switzerland
Asset Class:
Equities
Rationale for engagement: The company was listed on the public market in late 2023 through a special purpose
acquisition vehicle, resulting in a board with limited independence, minimal remuneration disclosures, and generally weak
reporting on financially material ESG risks. This created challenges for the fund management team in evaluating how the
company manages both financial and non financial risks, and raised concerns about shareholder alignment at board level.
Our expectation is that, over time, board independence and broader ESG disclosure will improve, enabling the investment
team to more effectively assess financially material risks.
What did we do? A member from each of the fund management and Responsible Investment and Governance teams
met with senior representatives, including the General Counsel & Compliance Officer, the Head of Group Procurement, and
Investor Relations. During this discussion, we provided feedback on board independence, the remuneration framework,
compliance and risk management policies, and broader environmental and social disclosures. Examples included
encouraging the adoption of differentiated short and long-term incentive performance criteria with clearly disclosed
targets and weightings; standardising compliance policies and systems; and increasing reporting on material
environmental and social risks.
We held a follow-up meeting focused on the company’s double materiality assessment as part of its efforts to strengthen
ESG reporting. Key areas discussed included governance and oversight, climate related disclosures, workforce
considerations, and risks relating to workers within the value chain.
Outcome and next steps: The follow-up meeting indicated that the company is beginning to integrate environmental
and social considerations into its approach. While we do not anticipate near term improvement in board
independence based on previous conversations, the company expressed that enhancing internal risk and control
processes and expanding disclosure remain priorities. We will review progress again ahead of the next annual general
meeting. Both engagements provided opportunities to share structured feedback, and we will continue monitoring
how the company strengthens its protocols and reporting over time. We also expect that improvements may
eventually be reflected in a higher external ESG rating, which currently remains at the lower end of the scale relative
to peers for one third-party ESG rating provider.
Escalation case study
Sector:
Technology
Topic:
Company performance,
management succession and
capital structure
Geography:
Netherlands
Asset Class:
Equities
Rationale for engagement: In 2025, we initiated focused, outcome-oriented engagements with a Dutch conglomerate as
several issues began to emerge. The company had issued multiple profit warnings, and we observed another shareholder
accumulating a significant stake, raising concerns about a potential buyout at a price that may not serve minority
shareholders. This prompted us to review the capital structure, which relies on depository receipts, a mechanism
commonly used in Dutch markets as an anti-takeover defence. While protective, this structure creates opacity and
potential misalignment with shareholder interests. Our objective was to communicate concerns regarding financial
deterioration, operational management, and structural governance to ensure the board acknowledges these issues and
takes action to protect shareholder interests.
What did we do? Members of the fund management team and Responsible Investment and Governance team first
contacted the Chair of the Supervisory Board by email to understand the rationale and cost-benefit of maintaining the
current governance structure. The initial response provided no new insight, so we requested a direct call with the Chair to
discuss how minority shareholder interests would be safeguarded in the event of a takeover. When the company failed to
respond or arrange the call, we voted against the re-election of certain supervisory board members due to concerns over
limited responsiveness and shareholder rights.
Following another profit warning, we renewed our efforts and, after persistent follow ups since the start of the year, secured
a meeting with the Chair. During the meeting, we raised concerns about financial deterioration, succession planning, the
protective depository receipt structure, and the role of significant shareholders. We also presented a detailed financial
analysis highlighting a decade of underperformance and the potential upside from simplifying the conglomerate
structure. The Chair acknowledged these issues, confirmed the formation of a committee to address operational
challenges, and indicated that the governance structure is under review, with updates expected before the next annual
general meeting. He later requested a follow-up call to share our analysis with other board members, reiterating that the
board is listening to shareholder views.
Outcome and next steps: Our engagement established a constructive dialogue and ensured our concerns were
registered. Shortly after, the company announced a strategic shift at its capital markets day; focusing on automation,
divesting the cable segment, and exploring ownership options for electrification within 12-18 months. We commended
these actions and will continue to monitor progress on the strategic transition, succession planning, and governance
reforms, particularly the review of the depository structure.
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The European Smaller Companies Trust PLC Annual Report 2026
Business model continued
Promoting the Company’s success
As directors, we are mindful of our duty under Section 172 of the Companies Act 2006 to act in the way we consider, in
good faith, would be most likely to promote the success of the Company for the benefit of its shareholders as a whole,
having regard to the interests of stakeholders and the long-term consequences of decisions.
Our engagement processes help us understand what matters most to our stakeholders. Regular updates from the
investment manager, corporate broker and third-party service provider reviews provide the Board with the necessary
information to inform our discussions and decision-making. All significant Board decisions undergo evaluation to
assess their long-term implications and their impact on different stakeholder groups. While it is not always possible to
deliver positive outcomes for all stakeholders, we carefully balance competing priorities and act in the way we consider
most likely to promote the long-term success of the Company.
As an externally managed investment trust, the Company’s principal stakeholders include its shareholders, the
investment manager, service providers, regulators and the wider communities in which its portfolio companies operate.
The Board seeks to understand the views of these stakeholders and considers their interests as part of its decision-
making process.
Board decision making
Over the course of the year the Board considered several key issues, assessing the impact on stakeholders as part of
the process.
Combination with European Assets Trust PLC
In May 2025, following a period of underperformance,
European Assets Trust PLC (‘EAT’) invited proposals from
several investment trusts and investment managers
regarding a potential combination. The Board was
actively involved in the development and approval of
the Company’s proposal, with the Chairman leading
the investment management team in presenting the
opportunity to the EAT Board. The directors contributed
to discussions on the transaction structure, approved
the documentation required to implement the
combination and oversaw the shareholder
communications relating to the proposal.
In considering whether to participate in the process, the
Board carefully assessed the potential benefits and
risks for existing shareholders. Particular attention was
given to EAT’s substantial shareholdings within the
Columbia Threadneedle Savings Plans and the
potential impact on the Company’s share rating should
shares issued as part of the transaction subsequently
require repurchase in significant volumes. Following
detailed discussions with the investment manager and
the Company’s corporate broker, the Board concluded
that participation was in shareholders’ best interests.
The proposed transaction offered the prospect of a
lower management fee, enhanced scale and liquidity,
and would restore the Company’s size to broadly the
level that existed prior to the tender offer completed
earlier in the year.
Change to the dividend policy
As part of its consideration of whether to participate in
the EAT transaction process, the Board took the
opportunity to review the ongoing suitability of the
Company’s dividend policy. Since launch, the Company
had adopted a progressive dividend approach funded
entirely from revenue. However, against a backdrop of
wider investment trust discounts, increasing
competition for capital and growing demand from retail
investors for income-generating investments, the Board
considered whether an alternative approach would
better support the Company’s long-term success.
Following careful consideration, the Board agreed to
include an enhanced dividend policy within the
proposal submitted to the EAT Board. The proposal
for the new dividend policy was to target a total
dividend of 5% of the NAV per share as at the preceding
year end. The total dividend would be paid quarterly
over four interim dividends. The policy was
subsequently implemented following completion of the
combination in October 2025. The policy was applied
for the final three quarters of the Company’s financial
year ending 30 June 2026, delivering a total dividend of
8.43p per share.
In reaching its decision, the Board considered the
interests of both existing and prospective shareholders.
In particular, it assessed whether shareholder value
would be better served through a higher and more
predictable level of income designed to attract and
retain investors, or through continued reliance on share
buybacks as the primary mechanism for discount
management. The Board recognised that buybacks
principally benefit shareholders seeking liquidity,
whereas an enhanced dividend policy had the
potential to improve the attractiveness of the
Company’s shares and reward long-term shareholders.
The Board also considered the position of EAT
shareholders and concluded that the enhanced
dividend policy would help ensure that investors
rolling into the Company would participate in a
similarly attractive income proposition following
completion of the transaction.
22
The European Smaller Companies Trust PLC Annual Report 2026
Business model continued
Monitoring the share rating
The Board recognises that the operation of the
Company’s discount control mechanism is an
important element of its commitment to protecting
and promoting shareholder value. During the year, the
Board continued to monitor the rating of the
Company’s shares relative to its net asset value, taking
into account prevailing market conditions, investor
sentiment towards the investment trust sector and
European smaller companies, and the Company’s
long-term performance record.
The Board reviewed the effectiveness of the Company’s
approach to discount management at each scheduled
Board meeting, with input from the investment manager
and corporate brokers. In doing so, it considered both the
level and volatility of the discount and trading volumes in
the Company’s shares. The Board acknowledges that the
discount control should be applied in a disciplined and
transparent manner, while also recognising that
discounts can be influenced by broader market factors
outside the Company’s direct control.
Where appropriate, the Board considered the use of
share buybacks as a means of providing liquidity to
the market and seeking to limit any imbalance
between supply and demand for the Company’s
shares. The Board assessed buyback activity by
reference to the interests of shareholders as a whole,
including the potential accretive impact on net asset
value per share and the liquidity of the underlying
portfolio. The Board also considered the importance
of retaining sufficient scale in the Company to support
an efficient ongoing charge ratio and continued
marketability of the shares.
The Board remains satisfied that the Company’s
discount control mechanism continues to provide an
appropriate framework for managing the Company’s
share rating over time. It will continue to keep the
mechanism under regular review, taking account of
market conditions, shareholder views and the
Company’s investment strategy.
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
to Janus 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.
With effect from 15 October 2025, the base management
fee is 0.50% per annum of net assets up to £800m and
0.45% per annum thereafter. Previously, the first tier was
charged at 0.55% per annum. Fees are paid quarterly
in arrears.
The investment manager may also be eligible to receive
a performance related fee. Performance of the Company
and the benchmark, the MSCI Europe ex UK Small Cap
Index, is measured on a NAV total return (with gross
income reinvested) basis and 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.
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The European Smaller Companies Trust PLC Annual Report 2026
Our principal risks
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 material controls in place 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 Material control
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.
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 notable
advancements in technology, geopolitical
instability, 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.
Investment mandate limits established by the
Board are inappropriate leading to out-of-
scope investments which may negatively
impact shareholder value.
The Board periodically reviews the investment objective and policy
in line with best practice and taking account of investor appetites.
The Board receives regular updates on professional and retail
investor activity from the investment manager and the corporate
broker to inform themselves of investor sentiment and how the
Company is perceived in the market. From time to time, research
may be undertaken by third-party consultants to specifically
ascertain the views of retail investors.
The Board reviews the key performance indicators, portfolio
composition and diversification, gearing, compliance with the
investment mandate limits, the level of discount and changes to
the share register at each meeting.
The Board maintains an understanding of the fund management
team’s investment process and considers the external and internal
factors, which may impact the value of the portfolio.
The Board must approve changes to the investment limits and
restrictions and reviews compliance with these at each meeting.
Operational
Failure of, disruption to or inadequate service
levels provided by principal 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 regular reporting from the investment
manager’s Chief Information Security Officer on the firm’s cyber
security framework, any material incidents and their oversight of
the cyber security arrangements in place at third-party service
providers. The Audit Committee reviews the independently audited
assurance reports from third-party service providers which set out
the effectiveness of the internal controls in place. These include
controls relating to information technology and the robustness of
recovery arrangements.
24
The European Smaller Companies Trust PLC Annual Report 2026
Principal risk Material control
Legal and regulatory
Loss of HMRC approved investment trust status
or changes in the taxation regime applicable to
investment trusts.
Breach of the Companies Act 2006, the UK
Listing Rules, Prospectus Rules, the Disclosure
Guidance and Transparency Rules, the articles
of association or the Alternative Investment
Fund Manager’s Directive.
Legal action brought against the Company/
directors/investment manager leading to loss
of shareholder value and reputational damage.
At each meeting, the Board reviews compliance with the investment
mandate and testing against the requirements of the Corporation Tax
Act 2010 to ensure HMRC approved investment trust status is maintained.
The Board engages reputable third-party service providers to deliver
the Company’s operations. Service levels are agreed and monitored,
and the services delivered by the Company’s third-party service
providers are undertaken by suitably qualified individuals.
The Audit Committee assesses the effectiveness of internal controls
in place at the Company’s third-party service providers through
review of the independently audited assurance reports, which
include provisions regarding qualifications and ongoing training.
Financial
Market, liquidity and/or credit risk, inappropriate
valuation of assets 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 shares and the extent to
which revenue in excess of that which is required to be distributed,
should be retained.
Our principal risks continued
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The European Smaller Companies Trust PLC Annual Report 2026
Viability statement
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 29 September
2027 (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 in equity 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
investee companies;
• 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 in 2025 if they wished the Company to continue
in operation. The resolution was passed with the
overwhelming support of 99.8% of the shareholders who
voted. The next continuation vote will be put to
shareholders at the annual general meeting due to be
held in 2028. 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 the articles of association 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
European smaller 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, meaning it is
therefore appropriate to prepare these financial
statements on a going concern basis; and
• 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.
Approval
The Strategic report set out on pages 1 to 26 has been
approved by the Board.
On behalf of the Board
Daniel Burgess
Chairman of the Audit Committee
29 September 2026
Assessing our viability
26
The European Smaller Companies Trust PLC Annual Report 2026
Governance
In this section
28 Board of Directors
30 Fund management team
31 Corporate Governance report
37 Audit Committee report
40 Management Engagement Committee report
42 Nominations Committee report
44 Directors’ Remuneration report
47 Directors’ report
49 Statement of directors’ responsibilities
Konecranes, 0.6% of the portfolio
Manufacturer of industrial cranes, hoists and port equipment
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The European Smaller Companies Trust PLC Annual Report 2026
Board of Directors
The right balance of skills and experience
James Williams
N
ME
Position:
Chairman
Date of appointment:
1 November 2023
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
the investment trust sector and
financial markets.
External appointments
James is the chairman of F&C
Investment Trust plc, and a non-
executive director of NT Asian
Discovery Fund. He was previously
chairman of Schroder AsiaPacific
Fund plc.
See p.32 Leadership, roles and division of responsibilities
Daniel Burgess
A
N
ME
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
ME
A
N
Position:
Senior Independent Director and
Chair of the Management
Engagement Committee
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, she
was head of Swedish and Nordic
Equities at SEB Investment
Management and Handelsbanken
Asset Management.
Skills and experience
Ann has extensive asset
management and board experience
and her input gives greater insight on
market sentiment and conditions in
continental Europe.
External appointments
She is Chairman and co-founder of
Opti Sverige AB, a fintech start-up
within digital asset management and
holds a number of non-executive
directorships including Stenvalvet AB,
Stena Sessan AB and Sareg AB. She is
Chairman of the Investment
Committee at the Swedish
Foundation for Strategic Research.
Chair of Committee
A
Audit Committee
N
Nominations and
Remuneration Committee
ME
Management Engagement
Committee
28
The European Smaller Companies Trust PLC Annual Report 2026
Stuart
A
N
ME
Paterson
Position:
Independent non-executive director
Date of appointment:
16 October 2025
Career and background
Stuart was formerly a co-founder and
partner of Scottish Equity Partners LLP,
one of Europe’s leading technology
growth equity investors, managing
more than £1 billion of institutional
capital over two decades. Stuart has
over 25 years of equity investing
experience in European private
companies and has served on public
and private boards in numerous
sectors over the years. Stuart trained
with Ernst & Young (‘EY’) and is a
member of the Institute of Chartered
Accountants of Scotland. He worked
in corporate finance for EY before
moving into equity investment.
Skills and experience
Stuart has significant equity investing
experience in European private
companies.
External Appointments
Stuart 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. He was appointed
as a director of European Assets Trust
PLC in 2019, initially as chair of the
Audit Committee, and as chair from
May 2024.
Board of Directors continued
Katherine
A
N
ME
Cornish-Bowden
Position:
Independent non-executive director
Date of appointment:
16 October 2025
Career and background
Kate is a former fund manager for
Morgan Stanley, where she was
managing director and head of the
global equity team. Prior to this, she
worked as a research analyst at M&G.
Kate holds a master’s degree in
business administration, and has
completed the Financial Times
Non-Executive Director Diploma.
Skills and experience
Kate spent many years selecting
investment ideas, having managed
European and global equity
portfolios. In addition to asset
management expertise, Kate brings
experience from other boards in the
investment trust sector.
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. She was
previously a non-executive director of
Schroder Oriental Income Fund, and
European Assets Trust PLC.
Nadia
A
N
ME
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.
At Triton she currently serves as the
Head of Strategic Investments and
prior to that held sector co-head
roles in Business Services and Health
Care. Nadia has considerable private
board expertise across the DACH
region (Germany, Austria
and Switzerland), and in 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
IT Security Group AG and Siegwerk
Group Holding AK & Co KG.
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The European Smaller Companies Trust PLC Annual Report 2026
Deputy Fund
Manager
Deputy Fund
Manager
Julia Scheufler
Position:
Deputy Fund Manager
8 years at JHI
17 years’ financial industry
experience
Julia was appointed as a deputy
fund manager in 2024.
She is a portfolio manager on
the European Equities team at
Janus Henderson Investors, a
position she has held since 2024.
She joined the firm in 2018 as a
research analyst and became
an associate portfolio manager
in 2022. Prior to joining the firm,
Julia was a sell-side analyst on
the European mid-cap desk at
Berenberg from 2016. Before
that, she was an investment
analyst for a multi-asset
investment fund manager. She
began her career at Deloitte
PCS Limited in 2009.
Julia received a BSc degree
(Hons) in accounting and
finance from Warwick University,
and holds the Chartered
Financial Analyst designation.
Rory Stokes
Position:
Deputy Fund Manager
13 years at JHI
25 years’ financial industry
experience
Rory was appointed as a deputy
fund manager in 2014.
He is a portfolio manager on the
European Equities team at
Janus Henderson Investors, a
position he has held since 2015.
Rory joined Henderson in 2013 as
a European equity analyst. He
worked for Liberum Capital
Limited in small- and mid-cap
equity sales from 2007 and prior
to that held several roles at
Credit Suisse. He began his
career at HOLT Value Associates
as a research analyst in 2001.
Rory graduated with a degree in
philosophy, politics, and
economics from Oxford
University. He holds the
Chartered Financial Analyst
designation and is FCA
registered.
Ollie Beckett
Position:
Fund Manager
21 years at JHI
31 years’ financial industry
experience
Ollie was appointed as the
Company’s fund manager in
July 2011. He is a portfolio
manager on the European
Equities team at Janus
Henderson Investors.
Ollie first joined Henderson as an
assistant portfolio manager for
European equities at the time of
the firm’s merger with AMP Asset
Management in 1998, and
became a portfolio manager in
1999. He moved to the Global
Technology Team in 2000. He
left Henderson in 2003 to pursue
other interests before returning
to his current role with the firm
in 2005.
Ollie received a BA degree
(Hons) in economics and
government from the University
of Manchester.
p.10 Fund manager’s report
Fund Manager
Fund management team
30
The European Smaller Companies Trust PLC Annual Report 2026
Corporate Governance report
Governance codes
The Board is pleased to report to shareholders on how
the Company 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
‘UK Code’) 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
Corporate Governance Code published by the Association
of Investment Companies (the ‘AIC Code’). The AIC Code
addresses the principles set out in the UK Code as well as
additional recommendations on issues that are of specific
relevance to investment companies.
With the exception of provision 34 (provision 29 of the UK
Code), the Company has reported against the AIC Code
published in 2024.
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
and confirms 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 and does not maintain 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 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
the operations of the Company. Janus Henderson
Investors has been appointed to manage the investment
portfolio and is the Company’s Alternative Investment
Fund Manager. The investment manager also provides the
day-to-day accounting, company secretarial,
administrative, sales and marketing activities.
The Company 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
and assist shareholders with queries in respect 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 with the 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
the material 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 management team 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.
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 of concern.
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Corporate Governance report continued
The Chairman is able to attend meetings with all the
chairs of the investment companies managed by the
investment manager 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. The Board and the
investment manager operate in a 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 full and 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.
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.
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Corporate Governance report continued
Role Primary responsibilities
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 management
team
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 six
directors. Their biographies are on pages 28 and 29.
Appointment, tenure and retirement of
directors
The Board may appoint directors at any time during
the year. Any director so appointed stands for election
by shareholders at the next annual general meeting.
Directors are generally expected to serve two terms of
three years, which may be extended to a third term,
and occasionally beyond, at the discretion of the Board
and subject to satisfactory performance evaluation
and annual re-election by shareholders.
All directors stand for re-election by shareholders
annually in keeping 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 and annual re-election by
shareholders. 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
Nomination Committee 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 in
July 2026 the Committee concluded that all directors
continued to be independent in character and judgement.
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
judgment. 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
to the deliberations of the Board, especially in light of the
Company’s business model and the entirely non-
executive nature of the Board.
Diversity
The Board supports the principle of boardroom diversity,
of which 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
of perspectives 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.
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Corporate Governance report continued
The UK 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 these
diversity targets.
Gender diversity
Number of
Board
members
% of the
Board
Number of
senior
positions on
the Board
1
Men
3 50 1
Women
3 50 1
Ethnic diversity
White British or other
White (including
minority white groups
5 83.3 2
Other
1 16.7 –
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,
to authorise 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 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 that may 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 each director.
The table below sets out individual directors’ attendance
for scheduled meetings during the reporting period. All
directors in office at the time of the annual general
meeting held on 24 November 2025, attended the meeting.
Board
Audit
Committee
Nomination
Committee
Manage-
ment
Engage-
ment
Committee
James Williams
1
5/5 5/5 1/1 1/1
Daniel Burgess
5/5 5/5 1/1 1/1
Katherine
Cornish-Bowden
2
3/3 3/3 0/0 0/0
Ann Grevelius
5/5 5/5 1/1 1/1
Nadia Meier-
Kirner
5/5 5/5 1/1 1/1
Stuart Paterson
2
3/3 3/3 0/0 0/0
1 Attends the Audit Committee by invitation
2 Former EAT directors appointed to the Board on 16 October 2025
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The European Smaller Companies Trust PLC Annual Report 2026
Corporate Governance report continued
Risk management and internal control
The Board has overall responsibility for the Company’s risk
management and internal control framework and for
reviewing its effectiveness. The Audit Committee supports
the Board in monitoring the framework, including controls
operated by the investment manager and other key
service providers.
The Board has established an ongoing process for
identifying, evaluating and managing the principal and
emerging risks faced by the Company. The process
operated throughout the year and up to the date of this
report. It reflects the Company’s externally managed
structure and its reliance on specialist service providers.
The framework is designed to manage, rather than
eliminate, the risk of failure to achieve the Company’s
objectives and can provide only reasonable, not absolute,
assurance against material misstatement or loss.
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 material 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 Board, assisted by the Audit Committee conducted a
review of the Company’s system of internal controls for
the year ended 30 June 2026 and is satisfied that it has
not identified or been advised of any failings or
weaknesses that have been determined as significant.
By order of the Board
Janus Henderson Secretarial Services UK Limited
Corporate Secretary
29 September 2026
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Board of Directors
(comprised entirely of non-executive directors)
Ernst & Young LLP
(Statutory auditor)
HSBC
(Depositary/
custodian)
Reporting
Depositary’s report
(quarterly)
Presentation from the
depositary and
custodian (annually)
Effectiveness of
control environment
(semi-annually)
Equiniti
(Registrar)
KPMG
(EU withholding
tax)
Winterflood
(Corporate broker)
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)
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
of control
environment
(annually)
The framework of material controls
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.
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.
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The European Smaller Companies Trust PLC Annual Report 2026
Audit Committee report
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 and areas of judgment applied and the use
of the going concern basis for their preparation;
• the appointment of the auditor, determination of their
remuneration and agreeing the nature and scope of
the audit;
• the findings set out in the audit report, as well as
assessing the objectivity and effectiveness of the auditor;
• the policy on the provision of non-audit services by the
auditor and the auditor’s independence;
• the impact of the change in the dividend policy on the
Company’s financial position;
• the assessment of the principal and emerging risks
facing the Company and the Company’s long-term
viability in light of these risks;
• considering the need for an independent internal audit
function; and
• the whistleblowing arrangements in place at the
investment manager enabling staff to raise concerns
about possible improprieties in confidence.
Financial statements
The Committee reviewed the half-year financial
statements, paying particular attention to the accounting
for the combination with EAT and subsequent cancellation
of the share premium account. Additional work was
undertaken in conjunction with the auditor at the half-
year with a view to ensuring the consistency of the
accounting presentation, well ahead of the financial
year-end.
The Committee further reviewed the annual report and
financial statements for the year ended 30 June 2026,
considering the appropriateness of the accounting
standards applied in their preparation, the few areas of
judgment for review and the adoption of the going
concern basis for their preparation.
The significant issues which the Committee considered are
set out in the table overleaf. The Committee considers the
annual report to be fair, balanced and understandable.
Principal and emerging risks
The Committee reviewed the principal risks facing the
Company prior to the publication of the half-year and full-
year financial statements, ensuring the disclosures in this
respect were accurate.
Provision 29 of the UK Code (34 of the AIC Code) will
become applicable to the financial statements for the
year ending 30 June 2027. This provision requires the
Board to confirm the effectiveness of the Company’s
material controls as at the Balance Sheet date. The
Committee reviewed the Company’s risk management
framework, material controls in place and reporting
received by the Board and its committees in respect of
the control environment. Having undertaken this review,
the Company is well placed to address this requirement
for the current financial year.
Daniel Burgess
Chairman of the
Audit Committee
Role
The Committee is responsible for ensuring the
integrity of the Company’s financial reporting,
evaluating the effectiveness of the systems of
internal control and risk management and
monitoring the effectiveness and objectivity
of the external auditor.
Meetings
The Committee usually meets five times a
year. The Company’s auditor, the fund
management team and the investment
manager’s Financial Reporting Senior
Manager are invited to attend meetings of
the Committee on a regular basis.
The Committee meets with the audit partner
and audit manager without the presence of
staff from the investment manager at least
once a year.
Committee members:
Daniel Burgess (Chairman), Katherine
Cornish-Bowden, Ann Grevelius, Nadia
Meier-Kirner, Stuart Paterson.
At least one director has recent
and relevant experience.
Number of meetings in year: 5
Private sessions with the auditor: 1
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Audit Committee report continued
Significant issue How the Committee addressed the issue
Accounting for the combination
with EAT
The Committee assessed the impact of the combination with EAT and subsequent
cancellation of share premium account at the time the half-year results were
prepared. Additional work was undertaken with the auditor in determining the
appropriate accounting approach and presentation of these changes.
The Board reviewed the financial statements at the year-end to ensure the
consistency of accounting treatment and that the disclosures relating to the
combination and cancellation of share premium account were fair, balanced
and understandable.
Valuation and ownership
of investments
The Committee reviewed the portfolio valuation at the year-end. The fund
accountants perform the valuation of the assets based on the investment
manager’s valuation policy, which is compliant with the requirements of the AIFMD
rules and reflects the adoption of fair value accounting principles. The Committee
sought confirmation from the investment manager’s financial oversight team as
to whether any changes to the policy had been made during the year and from
the auditor as to whether their independent valuation of the assets identified any
pricing anomalies.
Recognition of income
The Committee reviewed the accounting policies used in the preparation of
the financial statements for the year ended 30 June 2026. These set out the
principles applied in the recognition of income. Having sought confirmation
from the investment manager’s financial oversight function and the auditor
on the application of the policy, the Committee was satisfied that the income
generated by the portfolio, including amounts received as special dividends,
was appropriately recognised in the financial statements.
HMRC approved investment
trust status
The Committee reviewed the investment manager’s procedures for complying
with the regulations setting out the criteria required in order for the Company
to retain its HMRC approved investment trust status.
Calculation of performance fee
The Committee reviewed the calculation of the performance fee to ensure
consistency with the application of the methodology.
Internal audit function
As a fully managed investment trust, with no employees
or direct operations, the Company does not maintain its
own 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.
As part of it usual programme of business, the Committee
reviewed reporting throughout the year on the effectiveness
of and compliance with controls at key third-party service
providers and received reporting directly from the
investment manager’s Head of EMEA Internal Audit
on areas pertaining to investment trust operations.
Given the level of independent review attached to
reporting on the effectiveness of internal controls at
third-party service providers, the access the Committee
has to the investment manager’s second and third lines of
defence, and the challenges we would face in attempting
to conduct externally facilitated internal audits of key
service providers, we concluded that, given the current
operating model, it was not necessary for the Company
to have its own internal audit function.
Use of reserves
In supporting the Board’s review of the approach to paying
dividends, the Committee considered the Company’s
various reserves and how best to use these. The share
premium account was cancelled following completion of
the combination with EAT, making available additional
distributable funds to support the new dividend policy of
targeting a total dividend of 5% of the NAV per share as at
the end of the previous financial year.
We concluded that revenue reserves should be used
initially to support the dividend, with buybacks funded
through use of the special distributable reserve.
External audit
The Committee reviewed the Audit Plan for the year
ended 30 June 2026, discussing this the audit partner and
audit manager. The Committee considered and agreed
the audit fee for the year ended 30 June 2026, which
amounted to £62,600 (2025: £60,900).
The Audit Plan remained largely unchanged from the prior
year, with the exception that the risk of incomplete or
inaccurate revenue recognition arising from the
classification of special dividends was removed as a fraud
risk. Special dividends have typically been infrequent and
not material in size. These are therefore unlikely to represent
a risk should an instance of fraud be perpetrated.
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The European Smaller Companies Trust PLC Annual Report 2026
Effectiveness of the audit
On completion of the audit, the Committee evaluated the
effectiveness of the external audit. This exercise comprised
two components; consideration was given to the findings
of the FRC’s Audit Quality Inspection Report and the
Chairman led a post-audit assessment inviting
comments from the auditor, 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 by EY.
Re-appointment of the auditor
EY was appointed as the Company’s auditor in 2017 and
submitted their first audit report in respect of the year
ended 30 June 2018. The audit partner, Mike Gaylor, has
completed four audits in post. In keeping with current
regulations to put the audit to tender once every ten
years, we anticipate inviting tenders for the audit over the
latter part of the 2026 calendar year and considering
presentations in early 2027.
Taking account of the outcome of the assessment of
the effectiveness of the recent audit, the Committee
has recommended to the Board that EY should be
re-appointed by shareholders at the forthcoming annual
general meeting.
Daniel Burgess
Chairman of the Audit Committee
29 September 2026
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;
• assessing the appropriateness of fees paid to the
auditor; and
• assurances provided by the auditor on their
compliance with the relevant ethical standards.
EY has confirmed that all of its partners and staff
involved with the audit are independent of any links to
the Company, and that these individuals have
complied with their ethics and independence policies
and procedures which are fully consistent with the
FRC’s Ethical Standards.
Policy on the provision of non-audit
services
The Committee has approved, and keeps under
regular review, the policy on the provision of non-audit
services by the auditor. The policy 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 to exceed 70% of the
average annual statutory audit fee for the three
consecutive financial periods preceding the financial
period to which 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.
Audit Committee report continued
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Management Engagement Committee report
Responsibilities
In discharging its duties over the course of the year, the
Committee considered:
• the quality of services delivered by the investment
manager, our principal service provider, including
– the overall performance of the Company’s portfolio
against the benchmark and peers in both the
closed-end and open-ended sectors, and the use
of gearing;
– the competitiveness of the fee structures in
comparison to the Company’s closed-end
competitors and other, similar sized investment
companies, as well as open-ended alternatives;
– the experience of the team involved in managing
all aspects of the Company’s business;
– the quality and effectiveness of communications
from the fund management team in terms of
keeping the Board updated on the composition
of the portfolio and from the wider investment trust
team on their engagement programmes with
professional and retail investors;
– how the investment manager ensured that the
Company’s legal and regulatory obligations were
discharged and whether it had met all of the
provisions of the management agreement;
• the overall performance, quality of services delivered
and competitiveness of fees for the Company’s other
third-party service providers, including the corporate
broker, registrar, depositary and fund administrator.
Evaluation of the investment manager
The Company’s key service provider is the investment
manager. The investment manager provides not only the
fund management team, but the research, systems and
support required by them to successfully manage the
Company’s assets. They also provide a dedicated
resource for communicating with professional
shareholders, facilitate the delivery of marketing to reach
retail shareholders and ensure that the Company fulfills
its legal and regulatory obligations.
As part of its formal assessment of the investment
manager, the Committee considered the quality and
effectiveness of the services provided throughout the
year, taking into account key performance indicators,
service standards, regulatory compliance, operational
resilience, the quality and timeliness of reporting and
responsiveness to Board requests. The Committee further
reviewed the resources, systems and controls employed
by the investment manager, together with any significant
developments, service issues or regulatory matters arising
during the year.
The Company has had an extraordinary 12-18 months, with
the requisition, 42.5% tender offer and combination with
EAT. These events have provided directors with a unique
insight into the investment manager’s ability to deal with
events outside of business as usual, and the Committee
considered the investment manager’s ability to access
additional resource and specialist services to support the
Company’s strategic objectives.
Ann Grevelius
Chair of the
Management
Engagement
Committee
Role
The Committee is responsible for formally
evaluating the overall performance of the
investment manager and other third-party
service providers engaged by the Company.
Meetings
The Committee usually meets at least once
a year.
Committee members:
Ann Grevelius (Chair), Daniel Burgess,
Katherine Cornish-Bowden, Nadia Meier-
Kirner, Stuart Paterson, James Williams
Number of meetings in year: 1
40
The European Smaller Companies Trust PLC Annual Report 2026
The Committee leveraged the input from the Audit
Committee’s review of the internal control environment
in operation at the investment manager and the
accessibility to senior members of the investment
manager’s second and third lines of defence in providing
updates on operational controls, cyber security and
business continuity arrangements. The Committee further
considered the level of contact maintained between the
investment manager’s sales function and the Company’s
professional shareholders, and how well these were
coordinated with the activities of the corporate broker.
The quality and effectiveness of the marketing activities
to reach retail investors was also assessed.
The Committee reviewed the competitiveness of fees
with closed-end peers within the AIC European Smaller
Companies and wider AIC Europe sectors, and also
against open-ended alternative investment offerings.
The Committee assessed whether the services received
continued to represent good value for shareholders. In
undertaking its evaluation, the Committee considered
industry developments and market practice.
Re-appointment of the investment
manager
Following completion of the evaluation, the Committee
concluded that the investment manager had performed
satisfactorily during the year and demonstrated the
necessary quality, expertise, resources and controls
required to support the Company. The Committee
therefore recommended to the Board that the continued
appointment of the investment manager remained in
the best interests of the Company and its shareholders.
Evaluation of other service providers
The Committee further undertook an assessment of the
Company’s other key service providers, including the
corporate broker, depositary and custodian, registrar
and fund administrator.
The assessment of the corporate broker focused on the
quality of market intelligence and shareholder feedback
provided to the Board, support for the Company’s
corporate actions and the effectiveness of engagement
with existing and prospective professional shareholders.
The review of the registrar included consideration of
shareholder servicing standards, the accuracy and
timeliness of processing shareholder transactions, and the
registrar’s operational resilience and control environment.
The Committee relies heavily on the input from the
investment manager in regard to the day-to-day services
delivered by the registrar, as our designated company
secretary remains the first point of contact.
In respect of the depositary, the Committee reviewed the
safeguarding of the Company’s assets, custody
operations, control and oversight procedures, the quality
of reporting provided to the Board and the effectiveness
of business continuity arrangements.
The Committee’s review of the fund administrator
comprised two elements. The first focused on the
accuracy and timeliness of NAV production and
compliance with the agreed service levels. These relate to
the day-to-day elements of the service which they deliver
to support the investment manager’s operations. Views
from the investment manager’s staff in evaluating these
elements was sought.
The second relates to reporting of the Company’s financial
position, through preparation of the management
accounts for each board meeting and the reporting for
the financial statements at the half- and full-year.
The Committee also considered the administrator’s
operational resilience, systems capability and
responsiveness to regulatory and reporting requirements.
Consideration was given to the competitiveness of fees
and whether the services provided continued to represent
good value for shareholders. Following its review, the
Committee concluded that the corporate broker,
depositary and custodian, registrar and fund administrator
had each performed effectively during the year.
Ann Grevelius
Chair of the Management Engagement Committee
29 September 2026
Management Engagement Committee report continued
Strategic
report
Financial
statements
Additional
information
AGM notice
Governance
Governan ce
Shareholder
information
41
The European Smaller Companies Trust PLC Annual Report 2026
Nominations Committee report
Responsibilities
In discharging its duties over the course of the year,
the Committee considered:
• 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 a view 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 forthcoming annual
general meeting.
Annual Board evaluation
The Committee oversaw the annual evaluation of the
effectiveness of the Board, its committees and individual
directors. The evaluation considered the Board’s
composition, the quality of information provided to
directors, the effectiveness of Board and committee
decisions and how well meetings were run, whether the
Board’s oversight of the Company’s strategy and risks
remained sufficiently robust and if our shareholder
engagement over the year had been sufficient.
Feedback was obtained from all directors via a
questionnaire, and the Chairman had private
conversations with each director to ascertain their views
on a range of matters. The evaluation confirmed that the
Board continues to operate effectively, with a constructive
culture that encourages open discussion, challenge and
debate. Directors concluded that Board meetings were
well managed, that sufficient time was devoted to key
strategic and governance matters and that the Board
maintained an appropriate focus on the long-term
interests of shareholders.
The Committee was further satisfied that each director
continued to make a valuable contribution to the Board’s
deliberations and demonstrated the necessary
commitment to fulfil their responsibilities effectively.
No significant concerns were identified during the review,
although a number of enhancements and areas of
ongoing focus were noted to support continuous
improvement. These included improvements to the
effectiveness of Board and committee reporting, and
initiating a programme offering shareholders the
opportunity to meet with the Chairman of the Board,
Role
The 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.
Meetings
The Committee meets at least once a year
to consider the composition of the Board,
succession planning, to review the outcome
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.
Committee members:
James Williams (Chairman), Daniel
Burgess, Katherine Cornish-Bowden,
Ann Grevelius, Nadia Meier-Kirner,
Stuart Paterson
Number of meetings in year: 1
James Williams
Chairman of
the Nomination
Committee
42
The European Smaller Companies Trust PLC Annual Report 2026
Evaluation of the Chairman
The annual evaluation of the Chairman was led by the
Senior Independent Director and included the views of
each of the other directors. The review considered the
Chairman’s leadership of the Board, continued
independence, effectiveness and conduct throughout
the year. Particular regard was given to the Chairman’s
stewardship during a period of significant corporate
activity, including the Company’s response to a
shareholder requisition, the implementation of the
42.5% tender offer and the Board’s consideration of the
combination with EAT.
The directors concluded that the Chairman had
exercised appropriate judgment, provided clear and
effective leadership, and maintained a strong focus on
the interests of shareholders while ensuring that the
Board remained fully informed and able to discharge
its responsibilities.
The Senior Independent Director reported to the
Committee that the Chairman continued to perform
effectively and that his continued leadership remained
in the best interests of the Company.
or other directors if they prefer, following a busy period
of corporate change for the Company.
Following consideration of the evaluation findings, the
Committee concluded that the Board and its committees
remained effective and that all directors continued to
contribute effectively to the success of the Company.
Succession planning
Succession planning remains an important area of focus
for the Committee and the structure, tenure and
composition of the Board and committees is kept under
review to ensure an appropriate balance of skills,
experience, independence and diversity is maintained
while preserving continuity and corporate knowledge.
The continuity aspect is particularly important where there
are no executive directors and the appointment of the
investment manager is at arms-length. In such instances,
it falls to the non-executive directors to maintain a
thorough understanding of the impact of decisions and
the prevailing rationale for taking them.
The Committee considered the future development of the
Board and reviewed the anticipated tenure of each
director, taking account of the Company’s strategic
objectives and the skills required to support effective
oversight of the Company’s investment strategy and
operations. Consideration was further given to committee
memberships and various chairs to ensure the orderly
transfer of responsibilities when necessary.
Two new directors joined the Board during the course
of the year, and their expertise and professional
backgrounds had not been part of the succession plan
for regular refreshment of Board membership. The
Committee therefore updated the Board’s succession
plan and considered where skills could be extended
to provide cover for other directors in the event of a
longer-term absence.
Following completion of the review, the Board’s succession
plan has been updated and the Committee is satisfied
that the Company is in a good position to, not only
progress with regular Board refreshment, but also
manage longer-term absences should they arise.
Re-election of directors
In accordance with the provisions of the AIC Code, all
directors will stand for re-election at the forthcoming
annual general meeting.
In considering the directors proposed for re-election, the
Committee reviewed their performance, contribution and
attendance during the year and considered the findings
of the annual Board evaluation. Each director’s external
commitments were reviewed and the Committee was
satisfied that all directors continue to be able to devote
sufficient time to the affairs of the Company.
The Committee concluded that each director remained
effective, continued to demonstrate commitment to their
role and contributed valuable skills, experience and
judgment to the Board’s deliberations. Accordingly, the
Committee recommended to the Board that all directors
standing for re-election at the forthcoming annual
general meeting be supported.
Policies
The Committee reviewed the Company’s diversity policy
and confirmed that it remained appropriate, recognising
the importance of maintaining a Board with a broad
range of skills, experience, backgrounds and perspectives.
The Committee noted that diversity considerations
continued to be embedded in succession planning and
the director recruitment process, while appointments
would continue to be made on merit and against
objective criteria.
The Committee reviewed its policy on the Chairman’s
tenure, which addressed the need to balance regular
Board refreshment and independence with continuity,
experience and effective leadership.
Following discussion, the Committee concluded that both
policies remained suitable for the Company’s current
circumstances and continued to support effective Board
composition and governance.
James Williams
Chairman of the Nomination Committee
29 September 2026
Nominations Committee report continued
Strategic
report
Financial
statements
Additional
information
AGM notice
Governance
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Shareholder
information
43
The European Smaller Companies Trust PLC Annual Report 2026
Directors’ Remuneration report
Statement from the Chairman
As the Company has no employees and all directors are
non-executive, the Board has not historically established a
separate Remuneration Committee. Non-executive
directors receive an annual fee for their services, paid
quarterly in arrears, and do not receive pension
contributions or participate in any share incentive
arrangement as the Company does not operate any
such schemes.
In accordance with the recommendation arising from the
previous year’s annual Board effectiveness review,
directors’ remuneration was considered by the Board as a
whole during the year. This represented a change from
the previous approach, under which remuneration
matters had been considered by the Nomination and
Remuneration Committee.
As part of its review, the Board considered the level of
directors’ fees paid by investment trusts of a comparable
size, trusts within the AIC peer group and the wider AIC
Europe sector, as well as other investment trusts
managed by the investment manager. The Board also
took into account inflation, by reference to the Consumer
Price Index, and the responsibilities undertaken by the
directors in discharging their duties to the Company.
Following this review, the Board approved modest
increases to directors’ fees, broadly in line with inflation.
The Board is satisfied that the revised remuneration
arrangements are consistent with the Company’s
Remuneration Policy, which was approved by
shareholders at the annual general meeting held in 2025.
Annual report on implementation
The Directors’ Remuneration report (the ‘Report’) is
prepared in accordance with Schedule 8 of The Large and
Medium-sized Companies and Groups (Accounts and
Reports) Regulations 2008 as amended in August 2013 (the
‘Regulations’). A resolution to approve this Report will be
put to shareholders at the annual general meeting to be
held on 16 November 2026.
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 chief executive 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
is disclosed within this Report in an appropriate format.
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 24 November 2025.
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 of association (£500,000 per annum
following approval by shareholders at the general
meeting held on 3 October 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.
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.
The Policy, irrespective of changes, is put to
shareholders at intervals of not more than three years.
44
The European Smaller Companies Trust PLC Annual Report 2026
Directors’ Remuneration report continued
Directors’ fees
The current fees for specific roles are set out in the
table below.
Role
From
1 July 2026
At
30 June 2026
At
30 June 2025
Chairman of
the Board
54,800 53,200 51,100
Chairman
of the Audit
Committee
43,800 42,500 40,850
Director
38,600 37,500 36,050
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 2026 30 June 2025
James Williams
33,000 18,000
Daniel Burgess
50,000 32,000
Katherine Cornish-Bowden
1
39,494 n/a
Simona Heidempergher
2
n/a 12,800
Ann Grevelius
15,000 15,000
Nadia Meier-Kirner
– –
Stuart Paterson
1
100,000 n/a
1 Appointed as directors on 16 October 2025
2 Retired as a director on 24 November 2025
In the period after the year-end, Katherine Cornish-Bowden acquired a
further 459 shares, bringing her total holding to 39,953
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 30 June 2016 with all dividends reinvested.
Share price total return Benchmark total return
£
202320222021202020192018 2024 202620252016 2017
50
100
150
200
250
300
350
400
450
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 of dividends.
Year ended
30 June 2026
£
Year ended
30 June 2025
£
Year ended
30 June 2026
% change
Year ended
30 June 2025
% change
Total remuneration paid to directors
1
416,596 200,084 108.2 8.2
Dividends paid on ordinary shares
27,394,715 18,903,134 44.9 0.5
1 Changes will fluctuate due to the number of directors in any one year. Fees for the year ended 30 June 2026 included payments for additional work
undertaken in relation to the requisitioned general meeting, tender offer and the combination with EAT
2 A new dividend policy was introduced in October 2025 targeting a minimum total dividend of 5% of the NAV per share as at the previous year end. The
total dividend for the year ended 30 June 2026 was therefore higher than for the previous year
Strategic
report
Financial
statements
Additional
information
AGM notice
Governance
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Shareholder
information
45
The European Smaller Companies Trust PLC Annual Report 2026
Directors’ Remuneration report continued
Directors’ remuneration (audited)
The remuneration paid to the directors serving during the years ended 30 June 2026 and 30 June 2025 is set out in
the table below. The table includes two new columns this year, which set out one-off payments to directors relating
to the additional work undertaken in respect of the requisitioned general meeting held on 3 February 2025 and the
combination with EAT. Both payments totaled £160,000, and a resolution enabling these payments to be made was
put to shareholders at the annual general meeting held on 24 November 2025.
Year ended 30 June 2026 Year ended 30 June 2025
Director
Fees
£
Ad hoc
payment
(requisition
and tender
offer)
£
Total
expenses
and
taxable
benefits
£
Total
included in
administra-
tive
expenses
£
Ad hoc
payment
(EAT
combina-
tion)
6
£
Total
paid to
directors
£
Fees
£
Total
expenses
and
taxable
benefits
£
Total
£
James Williams
1
53,200 40,000 2,469 95,669 20,000 115,669 45,048 1,593 46,641
Daniel Burgess
2
42,500 20,000 – 62,500 10,000 72,500 40,850 1,271 42,121
Ann Grevelius
39,389 20,000 4,231 63,620 10,000 73,620 36,050 6,343 42,393
Nadia Meier-
Kirner
37,500 – 2,505 40,005 10,000 50,005 6,338 – 6,338
Katherine
Cornish-Bowden
3
26,683 – – 26,683 – 26,683 – – –
Stuart Paterson
3
26,683 – 3,475 30,158 – 30,158 – – –
Simona
Heidempergher
4
16,228 20,000 1,733 37,961 10,000 47,961 36,050 1,264 37,314
Christopher
Casey
5
– – – – – – 20,551 4,726 25,277
Total
242,183 100,000 14,413 356,596 60,000 416,596 184,887 15,197 200,084
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 Chairman. Highest paid director
2 Chairman of the Audit Committee
3 Appointed as director on 16 October 2025
4 Retired as director on 24 November 2025
5 Retired as director on 25 November 2024
6 Accounted for as costs of the ESCT/EAT combination
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
1
Withheld
Remuneration Policy
(last voted on 24 November 2025)
95,198,648 99.2 786,545 0.8 1,068,506
Remuneration report
(last voted on 24 November 2025)
95,234,562 99.0 947,854 1.0 871,283
1 The percentage of votes excludes votes withheld
James Williams
Chairman
29 September 2026
46
The European Smaller Companies Trust PLC Annual Report 2026
Directors’ report
Share capital
The Company has a single class of shares comprising
the ordinary shares of 1.5625p. At 30 June 2026, the
Company’s paid up share capital consisted of 410,375,045
ordinary shares of 1.5625p each, of which 68,491,746 are
held in treasury and have no voting rights.
At the annual general meeting held on 24 November 2025,
shareholders authorised the directors to allot up to
41,037,504 ordinary shares (10% of the issued share capital
at the date of the resolution) and to repurchase up to
61,515,219 ordinary shares (14.99% of the issued share
capital at the date of the resolution).
The authorities to allot and repurchase shares will expire at
the earlier of 15 months from the date of the passing of the
resolution or the next annual general meeting. Directors will
be seeking to renew the authority to allot and repurchase
shares at the forthcoming annual general meeting.
In addition to the usual authorities sought from shareholders
each year, further authority was sought at the general
meeting held on 3 October 2025 for the issue of up to an
aggregate nominal value of £3,125,000 shares in connection
with the combination with EAT. A total of 131,128,841 new
ordinary shares were issued under this authority.
During the course of the year, the Company repurchased
16,769,698 ordinary shares for holding in treasury. A further
2,865,458 shares have been repurchased since the
year-end and the date of this report.
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
As at 30 June 2026, the following held more than 3% of the
Company’s issued share capital.
Interactive Investor
15.5%
Halifax Share Dealing
10.8%
Hargreaves Lansdown
9.9%
City of London Investment Management
7.2%
Lazard Asset Management
6.4%
Allspring Global Investments
4.8%
AJ Bell
4.3%
Rathbones
3.4%
Borrowings
The Company has a secured multi-currency overdraft
arrangement with HSBC Bank plc that allows it to borrow
up to the lesser of £160 million and 25% of custody
assets as and when required. At 30 June 2026, £80.9m
(2025: £8.2m) 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 to them 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
ad hoc payments in respect of additional work
undertaken in respect of the requisition, tender offer and
combination with EAT, 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, are given in note 21
on page 79.
Annual General Meeting
The Company’s annual general meeting will be
held at 12.30 pm on Monday 16 November 2026 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 92 of this annual report.
The directors present their report and the
Company’s audited financial statements for the
year ended 30 June 2026.
The Corporate Governance Report, committee
reports and Additional Information on pages 31 to 43
and 83 to 98 form part of the Directors’ report.
Strategic
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47
The European Smaller Companies Trust PLC Annual Report 2026
Directors’ report continued
Voting recommendation
The Board considers that the resolutions to be proposed
at the meeting 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
29 September 2026
Annual General Meeting (AGM)
The Board invites you to attend the AGM at 12.30 pm
on 16 November 2026 either in person or online.
Scan the QR code for more details and to register
your attendance.
48
The European Smaller Companies Trust PLC Annual Report 2026
Statement of directors’ responsibilities
The directors are responsible for preparing the annual
report and the financial 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
IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors and then apply them consistently;
• make judgments 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
the Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the
Company and enable them to ensure that the financial
statements and the 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 of fraud and other irregularities.
The directors consider that the annual report, taken as a
whole, is fair, balanced and understandable, and provides
the information necessary for shareholders to assess the
Company’s position and performance, business model
and strategy.
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
UK adopted 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
29 September 2026
Strategic
report
Financial
statements
Additional
information
AGM notice
Governance
Governan ce
Shareholder
information
49
The European Smaller Companies Trust PLC Annual Report 2026
Financial
statements
In this section
51 Independent auditor’s report to the members
59 Statement of Comprehensive Income
60 Statement of Changes in Equity
61 Balance Sheet
62 Statement of Cash Flows
63 Notes to the financial statements
Munters, 1.0% of the portfolio
Designs, manufactures and maintains mission critical climate control solutions
50
The European Smaller Companies Trust PLC Annual Report 2026
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 30 June 2026 which comprise the Statement of Comprehensive Income, the Statement of Changes in Equity, the
Balance Sheet, the Statement of Cash Flows and the related notes 1 to 24, 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 2026 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.
Our responsibilities 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 a basis 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 Corporate 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
29 September 2027 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 debt 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.
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 29 September 2027 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.
Strategic
report
Financial
statements
Additional
information
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Governance
Financial
Statements
Additional
information AGM notice
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report
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statements
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information
51
The European Smaller Companies Trust PLC Annual Report 2026
Independent auditor’s report to the members of The European Smaller Companies Trust PLC
continued
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.
• Risk of incorrect valuation or ownership of the investment portfolio.
• Risk of incorrect calculation of the performance fees.
Materiality • Overall materiality of £8.63m 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 may affect the Company’s investments. This is
explained in the principal and emerging risks and uncertainties section on page 24, 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.
We also challenged the directors’ considerations of climate change risks in their assessment of going concern and
viability and associated disclosures.
Based on our work we have not identified the impact of climate change on the financial statements to be a key audit
matter or to impact a key audit matter.
Key audit matters
Key audit matters are those matters that, in our professional judgment, 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 of the financial statements as a whole, and in our opinion thereon,
and we do not provide a separate opinion on these matters.
52
The European Smaller Companies Trust PLC Annual Report 2026
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 (as described on
page 38 in the Audit Committee
Report and as per the accounting
policy set out on page 64).
The total revenue for the year to
30 June 2026 is £20.12m
(2025: £20.70m), consisting primarily
of dividend income from listed equity
investments.
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.
Additionally, in accordance with the
AIC SORP, special dividends received
by the Company can be included in
either the revenue or capital
columns of the Statement of
Comprehensive Income depending
on the commercial circumstances
behind the payments.
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 2026.
• 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. The Company received
two special dividends in the year,
both classified as revenue. The
total value of special dividends
was immaterial to our audit.
The results of our procedures
identified no material
misstatement in relation to
incomplete or inaccurate revenue
recognition.
Strategic
report
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statements
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information
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Statements
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The European Smaller Companies Trust PLC Annual Report 2026
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 38 in the Audit
Committee Report and as per
the accounting policy set out
on page 64.
The valuation of the investment
portfolio at 30 June 2026 was
£942.30m (2025: £517.34m)
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
at the 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
2026 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
54
The European Smaller Companies Trust PLC Annual Report 2026
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 38 in the Audit Committee
Report and as per the accounting
policy set out on page 64).
The investment manager is eligible
to receive a performance related
fee when certain criteria are met, as
prescribed in the management
agreement (‘MA’). The performance
fee for the year to 30 June 2026 was
£0.74m (2025: £1.78m).
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 MA or that
the methodology is open to
misinterpretation.
We performed the following
procedures:
• We obtained an understanding
of the processes and controls
surrounding the performance
fee calculation by performing
walkthrough procedures to
evaluate the design
effectiveness of controls.
• We reviewed the MA 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 MA.
• We agreed the key inputs of the
calculation to underlying financial
records, the MA 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
not breached.
The results of our procedures
identified no material
misstatement in relation to the
risk of incorrect calculation of the
performance fees.
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 £8.63m (2025: £5.11m), which is 1% (2025: 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 alter the basis of calculation at
year end.
Independent auditor’s report to the members of The European Smaller Companies Trust PLC
continued
Strategic
report
Financial
statements
Additional
information
AGM notice
Governance
Governance
Financial
Statements
Additional
information AGM notice
Strategic
report
Financial
statements
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information
55
The European Smaller Companies Trust PLC Annual Report 2026
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
judgment was that performance materiality was 75% (2025: 75%) of our planning materiality, namely £6.47m
(2025: £3.83m).
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 £0.88m
(2025: £0.87m) being 5% (2025: 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
£0.43m (2025: £0.26m), 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
56
The European Smaller Companies Trust PLC Annual Report 2026
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 63;
• 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 26;
• Director’s 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 63;
• Directors’ statement on fair, balanced and understandable set out on page 49;
• Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on
page 24;
• The section of the annual report that describes the review of effectiveness of risk management and internal control
systems set out on page 35; and
• The section describing the work of the Audit Committee set out from page 37.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 49, the directors are responsible for
the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these 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
Strategic
report
Financial
statements
Additional
information
AGM notice
Governance
Governance
Financial
Statements
Additional
information AGM notice
Strategic
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statements
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information
57
The European Smaller Companies Trust PLC Annual Report 2026
• We understood how the Company is complying with those frameworks through discussions with the Audit
Committee and Corporate 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 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 9 years, covering
the years ending 30 June 2018 to 30 June 2026.
• 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
29 September 2026
Independent auditor’s report to the members of The European Smaller Companies Trust PLC
continued
58
The European Smaller Companies Trust PLC Annual Report 2026
Statement of Comprehensive Income
Year ended 30 June 2026 Year ended 30 June 2025
Note
Revenue
return
£’000
Capital
return
£’000
Total
return
£’000
Revenue
return
£’000
Capital
return
£’000
Total
return
£’000
2 Investment income
20,066 – 20,066 20,623 – 20,623
2 Other income
52 – 52 79 – 79
9
Gains on investments held at fair value
through profit or loss
– 101,197 101,197 – 82,027 82,027
Total income
20,118 101,197 121,315 20,702 82,027 102,729
Expenses
3 Management and performance fee
(750) (3,745) (4,495) (813) (5,030) (5,843)
4 Other operating expenses
(1,348) (34) (1,382) (1,789) – (1,789)
Profit before finance costs and
taxation
18,020 97,418 115,438 18,100 76,997 95,097
5 Finance costs
(374) (1,493) (1,867) (698) (2,791) (3,489)
Profit before taxation
17,646 95,925 113,571 17,402 74,206 91,608
6 Taxation
(994) – (994) (1,505) (46) (1,551)
Profit for the year and total
comprehensive income
16,652 95,925 112,577 15,897 74,160 90,057
7
Return per ordinary share –
basic and diluted
5.30p 30.52p 35.82p 4.24p 19.78p 24.02p
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.
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59
The European Smaller Companies Trust PLC Annual Report 2026
The notes on pages 63 to 81 form part of these financial statements
Statement of Changes in Equity
Year ended 30 June 2026
Note
Called up
share
capital
£’000
Share
premium
account
£’000
Capital
redemption
reserve
£’000
Special
distributable
reserve
£’000
Special
undistributable
reserve
£’000
Other
capital
reserves
£’000
Revenue
reserve
£’000
Total
£’000
Total equity at 1 July
2025
4,363 120,364 14,062 – – 338,863 33,025 510,677
Total comprehensive
income:
Profit for the year
– – – – – 95,925 16,652 112,577
14, 16,
17
Buyback of shares for
treasury
– – – (17,525) – (19,228) – (36,753)
23
Tender offer -
accrual adjustment
– – – – – 17 – 17
Capital costs
recoverable
– – – – – 9 – 9
24
Issue of shares on
ESCT/EAT
combination
2,049 302,072 – – – – – 304,121
Issue costs in respect
of the ESCT/EAT
combination
– – – – – (1,371) – (1,371)
21
Contribution from JHI
towards ESCT/EAT
combination
– – – – – 1,091 – 1,091
15, 16
Cancellation of share
premium account
– (422,436) – 371,904 50,532 – – –
Transfer from
undistributable
reserve to
distributable reserve
– – – 8,016 (8,016) – – –
8
Ordinary dividends
paid
– – – – – – (27,395) (27,395)
Total equity at
30 June 2026
6,412 – 14,062 362,395 42,516 415,306 22,282 862,973
Year ended 30 June 2025
Note
Called up
share
capital
£’000
Share
premium
account
£’000
Capital
redemption
reserve
£’000
Special
distributable
reserve
£’000
Special
undistributable
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, 17
Buyback of shares for
cancellation
(42) – 42 – – (4,720) – (4,720)
14, 17
Buyback of shares for
treasury
– – – – – (1,848) – (1,848)
23
Tender offer –
payments to
shareholders
(1,803) – – – – (349,391) – (351,194)
23
Net movement in
cash realisation pool
– – – – – 1,861 – 1,861
23 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
60
The European Smaller Companies Trust PLC Annual Report 2026
The notes on pages 63 to 81 form part of these financial statements
Balance Sheet
Note
At 30 June
2026
£’000
At 30 June
2025
£’000
Non current assets
9 Investments held at fair value through profit or loss
942,303 517,339
Current assets
11 Receivables
4,978 5,306
Cash and cash equivalents
502 1,396
5,480 6,702
Total assets
947,783 524,041
Current liabilities
12 Payables
(3,891) (5,182)
Bank overdrafts
(80,919) (8,182)
(84,810) (13,364)
Net assets
862,973 510,677
Equity attributable to equity shareholders
14 Called up share capital
6,412 4,363
15 Share premium account
– 120,364
16 Special distributable reserve
362,395 –
16 Special undistributable reserve
42,516 –
17 Capital redemption reserve
14,062 14,062
Retained earnings:
17 Other capital reserves
415,306 338,863
18 Revenue reserve
22,282 33,025
19 Total equity
862,973 510,677
19 Net asset value per ordinary share - basic and diluted
252.42p 224.45p
The financial statements on pages 59 to 81 were approved and authorised for issue by the Board on 29 September
2026 and signed on its behalf by:
Daniel Burgess
Chairman of the Audit Committee
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The notes on pages 63 to 81 form part of these financial statements
Statement of Cash Flows
Year ended
30 June 2026
£’000
Year ended
30 June 2025
£’000
Operating activities
Profit before taxation
113,571 91,608
Add back: interest payable
1,867 3,489
Less: Gains on investments held at fair value through profit or loss
(101,197) (82,027)
Sales of investments held at fair value through profit or loss
535,888 409,662
Purchases of investments held at fair value through profit or loss
(622,269) (312,211)
Decrease in prepayments and accrued income
480 1,010
Decrease in amounts due from brokers
131 1,459
(Decrease)/increase in accruals and deferred income
(1,508) 1,953
Net movement in cash realisation pool
– 1,861
(Decrease)/increase in amounts due to brokers
(638) 622
Contribution from JHI towards ESCT/EAT combination (see note 21)
1,091 –
Transfer of assets in respect of the tender offer - Cash exit
– 107,486
Capital costs recoverable
9 86
Accrued costs on tender offer
17 (950)
Debtor for shareholder tender cancelled
– 34
Net cash (outflow)/inflow from operating activities before interest and taxation
1
(72,558) 224,082
Interest paid
(1,653) (3,893)
Taxation on investment income
(1,277) (1,739)
Net cash (outflow)/inflow from operating activities
(75,488) 218,450
Financing activities
Equity dividends paid (net of refund of unclaimed dividends - see note 8)
(27,395) (18,898)
Buyback of shares for cancellation
– (4,720)
Buyback of shares for treasury
(36,202) (1,685)
Net drawdown/(repayment) of bank overdraft
74,645 (81,214)
Costs associated with the ESCT/EAT combination
(1,281) –
Net cash acquired and received following ESCT/EAT combination (note 24)
64,827 –
Tender offer - cash exit
– (108,455)
Tender offer - in specie exit
– (3)
Tender offer - costs
– (2,311)
Net cash raised from/(used in) financing activities
74,594 (217,286)
(Decrease)/increase in cash and cash equivalents
(894) 1,164
Cash and cash equivalents at the start of the year
1,396 232
Cash and cash equivalents at the end of the year
502 1,396
Comprising:
Cash at bank
502 1,396
502 1,396
1 Cash inflow from dividends was £20,354,000 (2025: £21,779,000) and cash inflow from interest was £72,000 (2025: £11,000)
62
The European Smaller Companies Trust PLC Annual Report 2026
The notes on pages 63 to 81 form part of these financial statements
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 and is an HMRC approved
investment trust. The financial statements for the year ended 30 June 2026 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 26. 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 21 Amendments Lack of Exchangeability 1 January 2025
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 7 and 9 Amendments Classification and Measurement of Financial Instruments 1 January 2026
IFRS 18 Presentation and Disclosure in Financial Statements 1 January 2027
With the exception of IFRS 18, the standards issued but not yet effective, will have no material impact on the financial
statements of the Company in future periods. The potential impact of IFRS 18 remains under consideration, but is
expected to be mainly presentational.
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.
As part 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 29 September 2027.
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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 initially 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 quoted 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 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 section 1158 of the Corporation Tax Act 2010, for further information please refer to note 6 on page 68.
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 standard 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 section 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.
64
The European Smaller Companies Trust PLC Annual Report 2026
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 recorded in the Statement of Changes in Equity.
Following changes to the articles, approved by shareholders in November 2016, dividends may be paid from the revenue
reserve or realised capital profits (‘the capital reserve arising on investments sold’). With effect from December 2025,
following cancellation of share premium account, dividends may also be paid from the special distributable reserve.
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 in overseas 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 through profit or loss’.
j) Cash and cash equivalents
Cash comprises cash in hand and demand deposits. In the Statement of Cash Flows, 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 (2025: 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. From 9 December 2025, following cancellation of the share
premium account, the cost of buybacks in excess of the nominal value where the shares are cancelled, is taken to
capital (‘Realised capital reserves’, or the ‘Special distributable reserve’). Where shares are bought back and held in
treasury, the total cost is taken to capital.
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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.
On 15 October 2025 the share premium account increased by £302,072,000 following the issue of 131,128,841 ordinary
shares as a result of the combination with EAT (note 24). Subsequently, the amount standing to the value of the share
premium account as at 9 December 2025, being £422,436,000, was cancelled and £371,904,000 was transferred to the
‘Special distributable reserve’ and £50,532,000 was transferred to the ‘Special undistributable reserve’. The special
distributable reserve may be used to fund dividends or share buybacks.
Special distributable reserve and Special undistributable reserve
On 9 December 2025, £371,904,000 was transferred to the ‘Special distributable reserve’ and £50,532,000 was transferred
to the ‘Special undistributable reserve’. The amount of this newly created reserve, which can be distributed, is restricted
by the value of liabilities as at that date, until such time that those liabilities have been paid and is therefore split into
these two separate reserves. Between that date and 30 June 2026, liabilities of £8,016,000 were settled, increasing the
amount that is distributable.
p) Distributable reserves
The Company’s capital reserve arising on investments sold of £311,976,000 (2025: £236,305,000), special distributable
reserve of £362,395,000 (2025: £nil) and revenue reserve of £22,282,000 (2025: £33,025,000) 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 is not 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.
The directors consider that the Company has one operating segment, being the activity of investing in shares and
securities primarily for capital appreciation in accordance with the Company’s published investment objective.
66
The European Smaller Companies Trust PLC Annual Report 2026
Notes to the financial statements continued
2 a) Investment income
2026
£’000
2025
£’000
UK dividend income from listed investments
787 850
Overseas dividend income from listed investments
19,254 19,773
Property income dividends
25 –
20,066 20,623
All overseas dividend income is derived from investments in Continental Europe.
2 b) Other income
2026
£’000
2025
£’000
Bank interest
27 57
Interest received on withholding tax refund
25 22
52 79
3 Management and performance fees
2026 2025
Revenue
return
£’000
Capital
return
£’000
Total return
£’000
Revenue
return
£’000
Capital
return
£’000
Total return
£’000
Management fee
750 3,002 3,752 813 3,252 4,065
Performance fee
– 743 743 – 1,778 1,778
Total
750 3,745 4,495 813 5,030 5,843
A summary of the terms of the management agreement is given on page 23 and in note 21 on page 79.
4 Other operating expenses
2026
£’000
2025
£’000
Revenue:
Auditor’s remuneration¹
63 61
Directors’ fees and expenses
2
356 200
Other expenses payable to the investment manager
3
285 167
Custody fees
215 217
Depositary charges
47 46
Printing
4
53 9
Advisory and consultancy fees
93 99
Requisitioned general meeting costs
– 799
Other expenses
236 191
1,348 1,789
Capital:
Legal fees in connection with cancellation of the share premium account
34 –
34 –
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 21. 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 21
4 2026 includes one off costs in relation to mailing of the annual report to former EAT shareholders
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Notes to the financial statements continued
5 Finance costs
2026 2025
Revenue
return
£’000
Capital
return
£’000
Total return
£’000
Revenue
return
£’000
Capital
return
£’000
Total return
£’000
Bank overdraft interest
374 1,493 1,867 698 2,791 3,489
6 Taxation
a) Analysis of charge in year
2026 2025
Revenue
return
£’000
Capital
return
£’000
Total return
£’000
Revenue
return
£’000
Capital
return
£’000
Total return
£’000
Foreign withholding taxes
2,274 – 2,274 2,405 46 2,451
Overseas tax reclaimable
(1,280) – (1,280) (900) – (900)
Total current tax for the year (see note 6b)
994 – 994 1,505 46 1,551
b) Factors affecting tax charge for the year
The tax assessed for the year ended 30 June 2026 is lower than the standard rate of corporation tax of 25% (2025: 25%).
2026 2025
Revenue
return
£’000
Capital
return
£’000
Total return
£’000
Revenue
return
£’000
Capital
return
£’000
Total return
£’000
Net profit on ordinary activities before
taxation
17,646 95,925 113,571 17,402 74,206 91,608
Corporation tax at standard rate of 25%
(2025: standard rate of 25%)
4,412 23,981 28,393 4,351 18,552 22,903
Effects of:
Gains on investments held not taxable
– (25,299) (25,299) – (20,507) (20,507)
Expenses not deductible for tax purposes
– 8 8 – – –
Corporate interest restriction
– – – 72 286 358
Expenses unutilised for tax purposes
543 1,310 1,853 610 1,669 2,279
Non-taxable dividends
(4,955) – (4,955) (5,033) – (5,033)
Overseas tax
994 – 994 1,505 46 1,551
Tax charge
994 – 994 1,505 46 1,551
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.
Consequently, the Company has not recognised a deferred tax asset totalling £25,485,000 (2025: £23,625,000) arising
as a result of having unutilised management expenses and unutilised non-trade loan relationship deficits totalling
£101,940,000 (2025: £94,499,000), and based on a prospective tax rate of 25% (2025: 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.
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The European Smaller Companies Trust PLC Annual Report 2026
Notes to the financial statements continued
7 Return per ordinary share
The return per ordinary share figure is based on the net profit for the year of £112,577,000 (2025: profit £90,057,000) and
on the weighted average number of ordinary shares in issue during the year of 314,297,405 (2025: 374,911,120).
The return per ordinary share figure detailed above can be further analysed between revenue and capital, as below.
The Company 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 (2025: same).
2026
£’000
2025
£’000
Net revenue profit
16,652 15,897
Net capital profit
95,925 74,160
Net profit
112,577 90,057
Weighted average number of ordinary shares in issue during the year
314,297,405 374,911,120
2026
Pence
2025
Pence
Revenue return per ordinary share
5.30 4.24
Capital return per ordinary share
30.52 19.78
Total return per ordinary share
35.82 24.02
8 Dividends
2026
£’000
2025
£’000
Amounts recognised as distributions to equity holders in the year:
Second interim dividend of 3.45p per ordinary share for the year ended 30 June 2025
(2025: final dividend of 3.35p)
7,849 13,193
First interim dividend of 1.45p per ordinary share for the year ended 30 June 2025
– 5,710
Interim dividend for the second quarter of 2.81p per ordinary share for the year ended
30 June 2026
9,861 –
Interim dividend for the third quarter of 2.81p per ordinary share for the year ended
30 June 2026
9,685 –
Unclaimed dividends from prior years
– (5)
27,395 18,898
The second interim dividend of 3.45p per ordinary share in respect of the year ended 30 June 2025 was paid on
8 October 2025, prior to the combination with EAT and in lieu of the final dividend, to shareholders on the Register of
Members at the close of business on 19 September 2025. The total dividend paid amounted to £7,849,000.
For the year ended 30 June 2026 the Company has declared and paid the interim dividends for the second and third
quarters, under the new dividend policy adopted on completion of the combination with EAT. The policy targets a total
dividend of at least 5% of the NAV per share as at the end of the preceding financial year. The interim dividend for the
fourth quarter in the amount of 2.81p per share for the year ended 30 June 2026, which was declared on 21 July 2026,
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.
The total dividends payable in respect of the financial year which form the basis of the test under section 1158 are set
out below:
2026
£’000
2025
£’000
Revenue available for distribution by way of dividends for the year
16,652 15,897
First interim dividend of 1.45p per ordinary share for the year ended 30 June 2025
– (5,710)
Second interim dividend of 3.45p per ordinary share for the year ended 30 June 2025
– (7,849)
Interim dividend for the second quarter of 2.81p per ordinary share for the year ended
30 June 2026
(9,861) –
Interim dividend for the third quarter of 2.81p per ordinary share for the year ended 30 June 2026
(9,685) –
Interim dividend for the fourth quarter of 2.81p per ordinary share for the year ended 30 June 2026
(based on 341,250,555 shares in issue at 30 July 2026 and eligible to receive the dividend)
(9,589) –
Transfer (from)/to Revenue reserve
(12,483) 2,338
The Company had no undistributed revenue for the year (2025: 11.3%).
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The European Smaller Companies Trust PLC Annual Report 2026
Notes to the financial statements continued
9 Investments held at fair value through profit or loss
2026
£’000
2025
£’000
Valuation at 1 July
517,339 883,842
Investment holding gains at 1 July
(102,558) (102,636)
Cost at 1 July
414,781 781,206
Purchases at cost
622,269 312,211
Purchases of investments at cost in respect of the ESCT/EAT combination
239,294 –
Sales at cost
(437,371) (384,971)
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
838,973 414,781
Investment holding gains at 30 June
103,330 102,558
Valuation of investments at 30 June
942,303 517,339
The Company received £535,888,000 (2025: £409,662,000) from investments sold in the year. The book cost of these
investments when they were purchased was £437,371,000 (2025: £384,971,000). 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.
In 2025, 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 23.
Total capital gains from investments
2026
£’000
2025
£’000
Realised gains based on historical cost
98,517 81,282
Add revaluation losses recognised in previous years
58,042 59,372
Gains on investments sold in year on carrying value at the previous Balance Sheet date
156,559 140,654
Revaluation of investments held at 30 June
(57,270) (59,450)
Exchange gains
1,908 823
Total
101,197 82,027
10 Substantial interests
The Company holds interests of 3% or more of any class of capital in four investee companies. These investments are
not considered by the directors to be significant in the context of these financial statements.
Company
Valuation
£’000
% of issued
share
capital
Bike24
3,561 3.7
Smartoptics
12,407 3.4
Trevi Finanziaria
6,957 3.1
Enity
8,113 3.0
11 Receivables
2026
£’000
2025
£’000
Securities sold for future settlement
142 273
Withholding tax recoverable
4,684 4,437
Prepayments and accrued income
152 596
4,978 5,306
70
The European Smaller Companies Trust PLC Annual Report 2026
Notes to the financial statements continued
12 Payables
2026
£’000
2025
£’000
Securities purchased for future settlement
529 1,167
Buyback of shares into treasury for future settlement
715 164
Accruals and deferred income
2,647 3,851
3,891 5,182
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
a variety 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
risk comprises market price risk (see note 13.1.1), currency risk (see note 13.1.2) and interest rate risk (see note 13.1.3).
The investment manager assesses the exposure to market risk when making each investment decision and monitors
the overall 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 £942,303,000 (2025: £517,339,000).
Concentration of exposure to market price risk
A geographical analysis of the Company’s investment portfolio is shown on page 14.
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 2026 is a decrease of
£188,000 (2025: £103,000) and on the capital return is an increase of £187,707,000 (2025: £103,054,000). Accordingly,
the impact on total profit after tax and the year end net assets is an increase of £187,519,000 (2025: £102,950,000).
The impact of a 20% decrease in the value of the investments on the revenue return as at 30 June 2026 is an increase
of £188,000 (2025: £103,000) and on the capital return is a decrease of £187,707,000 (2025: £103,054,000). Accordingly,
the impact on total profit after tax and the year end net assets is a decrease of £187,519,000 (2025: £102,950,000).
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The European Smaller Companies Trust PLC Annual Report 2026
Notes to the financial statements continued
13 Risk management policies and procedures continued
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.
2026
Euro
£’000
Swedish
krona
£’000
Swiss franc
£’000
Other
£’000
Receivables (securities sold for future settlement, dividends and other
income receivable)
3,495 – 1,192 256
Payables (securities purchased for future settlement, accruals and
other payables)
(473) – (56) –
Bank overdrafts
(80,919) – – –
Total foreign currency exposure on net monetary items
(77,897) – 1,136 256
Investments
598,563 186,923 75,583 52,766
Total net foreign currency exposure
520,666 186,923 76,719 53,022
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
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.
72
The European Smaller Companies Trust PLC Annual Report 2026
Notes to the financial statements continued
13 Risk management policies and procedures continued
13.1.2 Currency risk continued
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% (2025: 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
Sheet date.
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:
2026 2025
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
1,341 181 115 109 1,314 117 144 106
Capital return
66,235 20,685 8,364 5,839 40,405 7,844 5,021 3,975
Change to profit
after tax for the year
67,576 20,866 8,479 5,948 41,719 7,961 5,165 4,081
Impact on net assets
67,576 20,866 8,479 5,948 41,719 7,961 5,165 4,081
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:
2026 2025
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
(1,248) (148) (95) (89) (1,191) (97) (118) (86)
Capital return
(54,192) (16,924) (6,843) (4,777) (33,058) (6,418) (4,108) (3,252)
Change to profit
after tax for the year
(55,440) (17,072) (6,938) (4,866) (34,249) (6,515) (4,226) (3,338)
Impact on net assets
(55,440) (17,072) (6,938) (4,866) (34,249) (6,515) (4,226) (3,338)
The above amounts are 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.
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 (2025: same).
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The European Smaller Companies Trust PLC Annual Report 2026
Notes to the financial statements continued
13 Risk management policies and procedures continued
13.1.3 Interest rate risk continued
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
(2025: 100 basis points) in interest rates would have been as follows:
Statement of Comprehensive Income
Increase
in rates
2026
£’000
Decrease
in rates
2026
£’000
Increase
in rates
2025
£’000
Decrease
in rates
2025
£’000
Profit after tax
Revenue return
(157) 157 (2) 2
Capital return
(647) 647 (66) 66
Change to net profit and net assets
(804) 804 (68) 68
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 (2025: £160,000,000) and 25% (2025: 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 2026 was £80,919,000 (2025: £8,182,000) in Euros (2025: Euros).
The Board gives guidance to the investment manager as to the maximum amount of the Company’s resources that
should be invested in any one company. The policy is that the Company should generally remain fully invested and that
currently short term borrowings be used for gearing and financing, but it may also be used to manage short term cash
requirements.
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:
2026 2025
3 months
or less
£’000
Total
£’000
3 months
or less
£’000
Total
£’000
Current liabilities:
Borrowings under the overdraft facility
80,919 80,919 8,182 8,182
Amounts due in relation to securities purchased for future settlement
and accruals
3,891 3,891 5,182 5,182
84,810 84,810 13,364 13,364
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.
74
The European Smaller Companies Trust PLC Annual Report 2026
Notes to the financial statements continued
13 Risk management policies and procedures continued
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:
2026
£’000
2025
£’000
Receivables:
Securities sold for future settlement
142 273
Accrued income
116 386
Cash and cash equivalents
502 1,396
760 2,055
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
2026
942,303 – – 942,303
2025
517,339 – – 517,339
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Notes to the financial statements continued
13 Risk management policies and procedures continued
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 2026 comprised its equity share capital, reserves and debt that are shown in the
Company Balance Sheet at a total of £943,892,000 (2025: £518,859,000).
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 to issue new ordinary 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; and
• 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.
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 2025
227,524,156 51,722,048 279,246,204 4,363
Buyback of shares for treasury
(16,769,698) 16,769,698 – –
Issue of shares on ESCT/EAT combination
131,128,841 – 131,128,841 2,049
At 30 June 2026
341,883,299 68,491,746 410,375,045 6,412
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
During the year the Company repurchased 16,769,698 ordinary shares for treasury (2025: 1,011,095), at a total cost of
£36,753,000 (2025: £1,848,000) and no ordinary shares were repurchased for cancellation (2025: 2,655,272 shares at
a cost of £4,720,000). Since the year end and as at 28 September 2026, being the latest practicable date before
publication, the Company had bought back 2,865,458 shares for holding in treasury at a cost of £6,780,000.
76
The European Smaller Companies Trust PLC Annual Report 2026
Notes to the financial statements continued
14 Called up share capital continued
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 23 for further detail.
On 15 October 2025 the Company issued 131,128,841 new shares to former EAT shareholders in consideration of the
£304,121,000 of net assets acquired from EAT in accordance with the scheme of reconstruction and winding up of EAT
under section 110 of the Insolvency Act 1986. See note 24 for further detail. No further ordinary shares have been issued
(2025: same).
15 Share premium account
2026
£’000
2025
£’000
At 1 July
120,364 120,364
Issue of shares on ESCT/EAT combination
302,072 –
Cancellation of share premium account
(422,436) –
At 30 June
– 120,364
On 15 October 2025 the share premium account increased by £302,072,000 following the issue of 131,128,841 ordinary
shares as a result of the combination with EAT (note 24). Subsequently, the amount standing to the value of the share
premium account as at 9 December 2025, being £422,436,000, was cancelled and £371,904,000 was transferred to the
‘Special distributable reserve’ and £50,532,000 was transferred to the ‘Special undistributable reserve’.
16 Special distributable reserve and Special undistributable reserve
2026
Special
distributable
reserve
£’000
Special
undistributable
reserve
£’000
Total
£’000
At 1 July 2025
– – –
Cancellation of share premium account
371,904 50,532 422,436
Transfer from undistributable reserve to distributable
8,016 (8,016) –
Buyback of shares for treasury
(17,525) – (17,525)
At 30 June 2026
362,395 42,516 404,911
On 9 December 2025, following cancellation of the share premium account, £371,904,000 was transferred to the ‘Special
distributable reserve’ and £50,532,000 was transferred to the ‘Special undistributable reserve’. The amount of this newly
created reserve, which can be distributed, is restricted by the value of liabilities as at that date, until such time that
those liabilities have been paid and is therefore split into these two separate reserves. Between that date and 30 June
2026, liabilities of £8,016,000 were settled, increasing the amount that is distributable.
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Notes to the financial statements continued
17 Capital redemption reserve and other capital reserves
2026
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 2025
14,062 102,558 236,305 338,863
Transfer on disposal of investments
(see note 9)
– 58,042 (58,042) –
Capital (losses)/gains for the year
– (57,270) 156,559 99,289
Expenses, finance costs and taxation
charged to capital
– – (5,272) (5,272)
Net gain on foreign exchange
– – 1,908 1,908
Buyback of shares for treasury
– – (19,228) (19,228)
Tender offer – accrual adjustment
– – 17 17
Capital costs recoverable
– – 9 9
Issue costs in respect of the ESCT/EAT
combination
– – (1,371) (1,371)
Contribution from JHI towards ESCT/EAT
combination
– – 1,091 1,091
At 30 June 2026
14,062 103,330 311,976 415,306
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
18 Retained earnings – revenue reserve
2026
£’000
2025
£’000
At 1 July
33,025 36,026
Ordinary dividends paid
(27,395) (18,898)
Revenue return for the year
16,652 15,897
At 30 June
22,282 33,025
19 Net asset value per ordinary share
The NAV per ordinary share is based on the net assets attributable to the ordinary shares of £862,973,000
(2025: £510,677,000) and on the 341,883,299 ordinary shares in issue at 30 June 2026 (2025: 227,524,156).
The Company has no securities in issue that could dilute the NAV per ordinary share (2025: same). The NAV per ordinary
share at 30 June 2026 was 252.42p (2025: 224.45p).
78
The European Smaller Companies Trust PLC Annual Report 2026
19 Net asset value per ordinary share continued
The movements during the year in assets attributable to the ordinary shares were as follows:
2026
£’000
2025
£’000
Net assets attributable to ordinary shares at start of year
510,677 798,594
Profit for the year
112,577 90,057
Dividends paid in the year
(27,395) (18,898)
Buyback of shares for cancellation
– (4,720)
Buyback of shares for treasury
(36,753) (1,848)
Tender offer - reduction in nominal value of share capital
– (1,803)
Tender offer - balance of payment to shareholders
– (350,791)
Tender offer - accrual adjustment
17 –
Capital costs recoverable
9 86
Issue of shares on ESCT/EAT combination
304,121 –
Issue costs in respect of the ESCT/EAT combination
(1,371) –
Contribution from JHI towards ESCT/EAT combination
1,091 –
Net assets at 30 June
862,973 510,677
20 Capital commitments and contingent liabilities
There were no capital commitments or contingent liabilities as at 30 June 2026 (2025: same).
21 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 S.A. to provide accounting and administration services.
Following completion of the combination with EAT, the base management fee payable to the investment manager is
0.50%, previously this was 0.55%, of net assets up to £800m, reducing to 0.45% thereafter. Fees are charged quarterly in
arrears. 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 2026
was £3,752,000 (2025: £4,065,000), of which £1,071,000 was outstanding at 30 June 2026 (2025: £938,000). A performance
fee of £743,000 (2025: £1,778,000) in respect of the year ended 30 June 2026 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 2026
amounted to £285,000 excluding VAT (2025: £167,000), of which £210,000 was outstanding at 30 June 2026 (2025: £nil).
The compensation payable to key management personnel in respect of short term employment benefits was £402,000.
This disclosure relates wholly to the fees of £402,000 payable to the directors in respect of the year (2025: £185,000); the
directors are all non-executive and receive no other compensation. The Directors’ Remuneration report on page 46
provides more detail. The Company has no employees.
The Company and EAT both bore their own costs in relation to the combination. These were reflected in the formula
applied to the respective net asset values of the two companies when they were compared to calculate the number of
shares in the Company which were to be issued to EAT shareholders.
The investment manager contributed to the costs of the proposals to ensure that they were cost neutral for continuing
shareholders, irrespective of the results of the combination. Direct costs borne by the Company were partially covered
by the contribution from the investment manager. The adjustment to the dividend payment profile for the Company in
respect of the year ended 30 June 2025, protected the Company’s existing shareholders from the impact of the
issuance of shares and the relatively short period to earn income on the enlarged share capital. As a result, shareholders
were protected from any adverse capital or income impact arising from the combination. The investment manager
further agreed to cover the costs incurred by the Company had the transaction not proceeded to completion.
The cost contribution as at 15 October 2025, was £1,128,000 and, under the terms of the agreement, would be reduced as
a result of any share buybacks from former EAT investors holding new shares issued by the Company in the Columbia
Threadneedle Savings Plans. As at 30 June 2026, the contribution had reduced to £1,091,000.
Notes to the financial statements continued
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The European Smaller Companies Trust PLC Annual Report 2026
22 Change in financial liabilities
At
1 July
2025
£’000
Cashflows
£’000
Non-cash
changes
in foreign
exchange
movement
£’000
At
30 June
2026
£’000
Bank overdrafts
(8,182) (74,645) 1,908 (80,919)
Total
(8,182) (74,645) 1,908 (80,919)
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)
23 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 give 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
Actual costs of tender paid in the year to 30 June 2026 were £17,000 lower than previously accrued. This movement has
been reflected in the Statement of Changes in Equity.
Notes to the financial statements continued
80
The European Smaller Companies Trust PLC Annual Report 2026
24 Transaction with European Assets Trust PLC (‘EAT’)
On 15 October 2025, the Company issued 131,128,841 new ordinary shares to shareholders of EAT in consideration for the
receipt by the Company of assets pursuant to a scheme of reconstruction and subsequent liquidation of EAT. The
directors have considered the substance of the assets and activities of EAT in determining whether this represents the
acquisition of a business. In this case the combination is not judged to be an acquisition of a business, and therefore
has not been treated as a business combination in accounting terms. Rather, the cost to acquire the assets and
liabilities of EAT has been allocated between the acquired identifiable assets and liabilities based on their relative fair
values on the acquisition date without attributing any amount to goodwill or to deferred taxes. Investments and cash
were transferred from EAT as set out in the table below. All assets were acquired at their fair value. The value of the
assets received, in exchange for shares issued by the Company, have been recognised in share capital and share
premium, as shown in the Statement of Changes in Equity. The number of shares issued were calculated in accordance
with the terms of the combination with EAT.
Net assets acquired £’000
Investments
239,294
Cash
64,827
Net assets
304,121
Satisfied by the value of new ordinary shares issued
304,121
Notes to the financial statements continued
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The European Smaller Companies Trust PLC Annual Report 2026
Additional
information
In this section
83 Portfolio holdings
86 Alternative performance measures
88 Historic performance and regulatory disclosures
89 Service providers
90 Glossary
Vidrala, 0.6% of the portfolio
Consumer packaging manufacturer of glass bottles and containers
82
The European Smaller Companies Trust PLC Annual Report 2026
82
The European Smaller Companies Trust PLC Annual Report 2026
Portfolio holdings
As at 30 June 2026
Ranking Valuation
2026 2025 Company Principal activities
2026
£’000
2025
£’000
Portfolio
%
1
5 IG Group Investment Banking and Brokerage
Services
23,980 10,605 2.5
2
2 TKH Electronic and Electrical Equipment
21,171 13,324 2.2
3
49 flatexDEGIRO Investment Banking and Brokerage
Services
17,818 4,282 1.9
4
7 SUSS MicroTec Technology Hardware and Equipment
17,045 9,427 1.8
5
10 Elmos Semiconductor Technology Hardware and Equipment
16,943 6,984 1.8
6
1 Van Lanschot Kempen Banks
15,532 15,450 1.6
7
9 Stroeer Media
15,384 7,598 1.6
8
69 Acast Software and Computer Services
14,528 3,423 1.5
9
3 Alzchem Chemicals
14,401 11,080 1.5
10
37 Indra Sistemas Software and Computer Services
14,356 4,659 1.5
11
65 Modern Times Media
14,241 3,553 1.5
12
57 JCDecaux Media
13,852 3,863 1.5
13
14 Andritz Industrial Engineering
12,921 6,769 1.4
14
18 Recticel General Industrials
12,451 5,910 1.3
15
86 Smartoptics Software and Computer Services
12,407 2,832 1.3
16
– Bechtle Software and Computer Services
12,357 – 1.3
17
8 Gaztransport et Technigaz Oil, Gas and Coal
12,055 8,428 1.3
18
4 KSB Industrial Engineering
11,720 10,947 1.2
19
13 Karnov Industrial Support Services
11,116 6,796 1.2
20
51 CTP Real Estate Investment and Services
11,027 4,196 1.2
21
– Tonies Leisure Goods
11,019 – 1.2
22
46 JOST Werke Automobiles and Parts
10,925 4,370 1.2
23
109 Boozt Retailers
10,911 2,212 1.2
24
– Ringkjobing Landbobank Banks
10,698 – 1.1
25
27 IONOS Software and Computer Services
10,658 5,183 1.1
26
– RaySearch Laboratories Medical Equipment and Services
10,441 – 1.1
27
74 ALSO Technology Hardware and Equipment
10,140 3,169 1.1
28
6 R&S Group Electronic and Electrical Equipment
10,071 10,573 1.1
29
36 Munters Construction and Materials
9,438 4,681 1.0
30
– ams-OSRAM Technology Hardware and Equipment
9,354 – 1.0
31
33 Alpha Services and Holdings Banks
9,179 4,946 1.0
32
99 Lindab Construction and Materials
9,141 2,503 1.0
33
– Framery Household Goods and Home
Construction
8,699 – 0.9
34
– Palfinger Industrial Engineering
8,237 – 0.9
35
– Fluidra Construction and Materials
8,217 – 0.9
36
54 Enity Banks
8,113 4,032 0.9
37
– Verallia General Industrials
8,111 – 0.9
38
63 PVA TePla Technology Hardware and Equipment
8,075 3,584 0.9
39
34 Trigano Leisure Goods
7,656 4,938 0.8
40
– Asmodee Leisure Goods
7,612 – 0.8
41
102 Biogaia Pharmaceuticals and Biotechnology
7,487 2,488 0.8
42
– JM Household Goods and Home
Construction
7,463 – 0.8
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Portfolio holdings continued
Ranking Valuation
2026 2025 Company Principal activities
2026
£’000
2025
£’000
Portfolio
%
43
61 Clinica Baviera Health Care Providers
7,448 3,675 0.8
44
30 Eckert & Ziegler Chemicals
7,433 5,105 0.8
45
– Aalberts Electronic and Electrical Equipment
7,344 – 0.8
46
– Fuchs Petrolub Chemicals
7,324 – 0.8
47
24 Mycronic Technology Hardware and Equipment
7,306 5,486 0.8
48
68 NCAB Technology Hardware and Equipment
7,264 3,441 0.8
49
– XVIVO Medical Equipment and Services
7,187 – 0.8
50
– Kardex Industrial Engineering
7,161 – 0.8
51
15 Acerinox Industrial Metals and Mining
7,145 6,700 0.8
52
– Thule Leisure Goods
7,136 – 0.8
53
– Trevi Finanziaria Construction and Materials
6,957 – 0.7
54
60 Dormakaba Electronic and Electrical Equipment
6,910 3,748 0.7
55
– Tecan Medical Equipment and Services
6,876 – 0.7
56
84 Elekta Medical Equipment and Services
6,805 2,902 0.7
57
52 Carl Zeiss Meditec Medical Equipment and Services
6,797 4,128 0.7
58
– RENK Aerospace and Defence
6,764 – 0.7
59
81 CIE Automotive Automobiles and Parts
6,639 3,028 0.7
60
56 Borregaard Chemicals
6,635 3,895 0.7
61
– Deutz Industrial Engineering
6,621 – 0.7
62
48 Mersen Electronic and Electrical Equipment
6,582 4,286 0.7
63
44 DFDS Industrial Transportation
6,355 4,427 0.7
64
89 Westwing Retailers
6,328 2,728 0.7
65
55 BHG Group Retailers
6,194 3,896 0.7
66
28 Deme Construction and Materials
6,078 5,154 0.6
67
– TSK Electronica Y Electricid Construction and Materials
6,056 – 0.6
68
– Vidrala General Industrials
6,049 – 0.6
69
50 Credito Emiliano Banks
6,036 4,243 0.6
70
11 Avolta Retailers
6,036 6,972 0.6
71
101 Stolt-Nielsen Industrial Transportation
5,941 2,491 0.6
72
– IMCD Chemicals
5,886 – 0.6
73
21 Bonava Household Goods and Home
Construction
5,868 5,761 0.6
74
100 Porr Construction and Materials
5,853 2,493 0.6
75
103 Neinor Homes Real Estate Investment and Services
5,824 2,390 0.6
76
105 Billerud Industrial Materials
5,751 2,346 0.6
77
80 Granges Industrial Metals and Mining
5,737 3,029 0.6
78
– Konecranes Industrial Transportation
5,728 – 0.6
79
31 Quadient Technology Hardware and Equipment
5,700 5,075 0.6
80
– SEMCO Technologies Technology Hardware and Equipment
5,644 – 0.6
81
35 Nexans Electronic and Electrical Equipment
5,609 4,891 0.6
82
59 VGP Real Estate Investment and Services
5,531 3,788 0.6
83
– Izertis Software and Computer Services
5,511 – 0.6
84
– Viridien Oil, Gas and Coal
5,432 – 0.6
85
– Arcadis Construction and Materials
5,432 – 0.6
86
41 Criteo Software and Computer Services
5,431 4,543 0.6
84
The European Smaller Companies Trust PLC Annual Report 2026
Portfolio holdings continued
Ranking Valuation
2026 2025 Company Principal activities
2026
£’000
2025
£’000
Portfolio
%
87
88 Teleperformance Industrial Support Services
5,369 2,728 0.6
88
– Medios Pharmaceuticals and Biotechnology
5,332 – 0.6
89
114 NTG Nordic Transport Industrial Transportation
5,299 2,068 0.6
90
25 Jungheinrich Industrial Engineering
5,231 5,370 0.6
91
12 Banco Comercial Portugues Banks
5,112 6,885 0.5
92
– Sopra Steria Software and Computer Services
5,098 – 0.5
93
29 Koninklijke BAM Group Construction and Materials
5,097 5,129 0.5
94
39 Kaufman & Broad Household Goods and Home
Construction
4,908 4,620 0.5
95
– CrediaBank Banks
4,897 – 0.5
96
23 Exosens Aerospace and Defence
4,888 5,611 0.5
97
72 NED Apparaten Electronic and Electrical Equipment
4,858 3,265 0.5
98
40 Ipsos Media
4,779 4,586 0.5
99
– Bravida Construction and Materials
4,695 – 0.5
100
– Shurgard Self Storage Real Estate Investment Trusts
4,631 – 0.5
101
96 Daetwyler General Industrials
4,592 2,550 0.5
102
17 HBX Group Travel and Leisure
4,581 6,295 0.5
103
– Troax Industrial Metals and Mining
4,546 – 0.5
104
– Atalaya Mining Industrial Metals and Mining
4,487 – 0.5
105
20 Merlin Properties Real Estate Investment Trusts
4,431 5,822 0.5
106
– Gabler Aerospace and Defence
4,382 – 0.5
107
112 Planisware Software and Computer Services
4,330 2,096 0.5
108
104 Safilo Personal Goods
4,143 2,349 0.4
109
– Comet Technology Hardware and Equipment
4,127 – 0.4
110
76 Cint Group Software and Computer Services
4,103 3,165 0.4
111
108 Befesa Waste and Disposal Services
4,038 2,225 0.4
112
– Adesso Software and Computer Services
3,992 – 0.4
113
45 Duerr Industrial Engineering
3,929 4,409 0.4
114
66 Smartcraft Software and Computer Services
3,842 3,523 0.4
115
110 Burckhardt Compression Industrial Engineering
3,696 2,144 0.4
116
53 GVS Medical Equipment and Services
3,692 4,047 0.4
117
– Shelly Electronic and Electrical Equipment
3,588 – 0.4
118
82 Bike24 Retailers
3,561 2,991 0.4
119
64 Stratec Medical Equipment and Services
3,529 3,557 0.4
120
– Kuros Biosciences Pharmaceuticals and Biotechnology
3,493 – 0.4
121
117 Arbonia Construction and Materials
3,127 1,786 0.3
122
90 Cewe Shiftung Consumer Services
3,087 2,720 0.3
123
95 Detection Technology Electronic and Electrical Equipment
2,947 2,555 0.3
124
– HelloFresh Personal Care, Drug and Grocery Stores
2,566 – 0.3
125
106 HomeToGo Travel and Leisure
2,006 2,292 0.2
Total equity investments
942,303 100.0
There were no convertible or fixed interest securities at 30 June 2026 (2025: None).
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The European Smaller Companies Trust PLC Annual Report 2026
Alternative performance measures (unaudited)
The Company uses the following alternative performance measures (‘APMs’) throughout the annual report, financial
statements and 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 2026
252.42 234.00 7.3
At 30 June 2025
224.45 211.50 5.8
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.
2026 2025
Investments held at fair value through profit or loss (page 70) (£’000)
(A) 942,303 517,339
Net assets (page 61) (£’000)
(B) 862,973 510,677
Gearing (C = (A / B) -1)
(C) 9.2% 1.3%
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 61 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 61 and further information is available on page 78 in
note 19 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.
2026
£’000
2025
£’000
Management fees (note 3)
3,752 4,065
Other administrative expenses (note 4)
1,348 1,789
Less: non-recurring expenses
1
(156) (822)
Ongoing charges (excluding performance fee)
4,944 5,032
Average net assets
2
746,604 735,806
Ongoing charges ratio (excluding performance fee)
0.66% 0.68%
Performance fee
743 1,778
Ongoing charges (including performance fee)
5,687 6,810
Ongoing charges ratio (including performance fee)
0.76% 0.93%
1 The non-recurring fees primarily consist of costs in relation to the requisitioned general meeting and combination with EAT
2 Calculated using the average daily net asset value
86
The European Smaller Companies Trust PLC Annual Report 2026
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. Any dividends 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 69.
2026 2025
NAV per share Share price NAV per share Share price
Opening NAV/Share price per share (pence)
224.45 211.50 201.01 178.40
Closing NAV/Share price per share (pence)
252.42 234.00 224.45 211.50
Change in the year (%)
12.5 10.6 11.7 18.6
Impact of dividends reinvested (%)
3.9 4.2 2.6 2.9
Total return for the year (%)
16.8 15.3 14.5 21.9
Dividend yield
The yield is the annual dividend expressed as a percentage of the year end share price.
30 June
2026
30 June
2025
Annual dividend (pence)
(A) 8.43 4.90
Share price (pence)
(B) 234.00 211.50
Yield (C=A/B) (%)
(C) 3.6 2.3
Alternative performance measures continued
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87
Regulatory disclosures
Alternative Investment Fund Managers Directive (‘AIFMD’)
The Alternative Investment Fund Managers Directive is a European Union Directive implemented in 2014. Under these
regulations the Company is considered an Alternative Investment Fund (‘AIF’) and is required to appoint an Alternative
Investment Fund Manager (‘AIFM’) and depositary. The Company has appointed Janus Henderson Fund Management
UK Limited as its Alternative Investment Fund Manager (‘AIFM’) and HSBC Bank plc as its depositary. In keeping with the
AIFM regulations, information regarding the Company’s leverage and the AIFM’s remuneration policies must be made
available to shareholders. These disclosures can be found in a separate document on the Company’s website.
Automatic exchange of information
Under UK tax legislation relating to the automatic exchange of information, the Company is obliged to provide information
annually to HMRC on the tax residencies of a number of non-UK based certificated shareholders and corporate entities.
Shareholders may receive information requests along these lines directly from the Company’s registrar, Equiniti.
For further information, please see HMRC’s Quick Guide: Automatic Exchange of Information – information for account
holders gov.uk/government/publications/exchange-ofinformation-account-holders.
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.
At
30 June
Net assets
£’000
NAV per
ordinary
share
1
p
Closing
price per
ordinary
share
1
p
Discount
2
%
Profit/
(loss) for
year
£’000
Revenue
return
1
p
Capital
return
1
p
Total
return
1
p
Total
dividend
1
p
Ongoing
charge
2
(AIC
formula)
%
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
3
510,677 224.45 211.50 5.8 90,057 4.24 19.78 24.02 4.90 0.68
2026
4
862,973 252.42 234.00 7.3 112,577 5.30 30.52 35.82 8.43 0.66
1 Figures for 2017 to 2021 are restated to take account of the 8:1 share split which completed on 13 December 2021
2 The discount and ongoing charge are alternative performance measures. More information on these can be found on pages 86 and 87
3 Net assets post completion of the 42.5% tender offer which concluded on 27 June 2025
4 Net assets post completion of the combination with European Assets Trust PLC which completed on 15 October 2025
Sources: Morningstar Direct, Janus Henderson Investors
Historic performance
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The European Smaller Companies Trust PLC Annual Report 2026
Service providers
Registered office
201 Bishopsgate, London EC2M 3AE
Service providers
Alternative Investment Fund Manager
Janus Henderson Fund Management UK Limited
201 Bishopsgate, London EC2M 3AE
Corporate Secretary
Janus Henderson Secretarial Services UK Limited
201 Bishopsgate, London EC2M 3AE
Telephone: 020 7818 1818
Email: itsecretariat@janushenderson.com
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
Registrar
Equiniti Limited
Highdown House, Yeoman Way, Worthing BN99 3HH
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.
Statutory Auditor
Ernst & Young LLP
25 Churchill Place, London E14 5EY
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Information sources
For more information about the Company, visit the website at www.europeansmallercompaniestrust.com where
you can find factsheets, updates and articles from the fund manager and other current information on the Company,
including the 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.
Glossary
Term Definition
Alternative
performance
measures
A glossary of alternative performance measures can be found on page 86 and 87.
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
such entities.
Benchmark
An index against which performance is compared. This is the MSCI Europe (ex UK) Small
Cap Index.
Custodian
The custodian is responsible for ensuring the safe custody of the Company’s assets and
that all transactions in the underlying holdings are transacted in an accurate and
timely manner.
Depositary
The depositary is responsible for overseeing the operations of the Company including cash
monitoring, verification of ownership of assets and their valuation. 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 in relation to any of the Company’s assets.
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 investment trusts.
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.
90
The European Smaller Companies Trust PLC Annual Report 2026
Notice of Annual
General Meeting
Ringkjoebing Landbobank, 1.1% of the portfolio
Bank providing financial products and services in Denmark
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The European Smaller Companies Trust PLC Annual Report 2026
Notice of Annual General Meeting
Notice is hereby given that the 36th Annual General Meeting of The European Smaller Companies Trust PLC (the
‘Company’) will be held at 201 Bishopsgate, London EC2M 3AE on Monday, 16 November 2026 at 12.30 pm for the
purposes of considering and, if thought fit, passing the following resolutions, of which resolutions 1 to 12 will be
proposed as ordinary resolutions and resolutions 13 to 15 will be proposed as special resolutions:
Ordinary resolutions
1 To receive the annual report and audited financial
statements for the year ended 30 June 2026.
2 To approve the Directors’ Remuneration report for the
year ended 30 June 2026.
3 To re-elect James Williams as a director.
4 To re-elect Daniel Burgess as a director.
5 To re-elect Katherine Cornish-Bowden as a director.
6 To re-elect Ann Grevelius as a director.
7 To re-elect Nadia Meier-Kirner as a director.
8 To re-elect Stuart Paterson as a director.
9 To re-appoint Ernst & Young LLP as auditor to the
Company.
10 To authorise the Audit Committee to determine the
auditor’s remuneration.
11 To approve the Company’s dividend policy of paying
four interim dividends per year.
12 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 of the Act) up
to an aggregate nominal amount of £641,211 (or such
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
13 THAT in substitution for all existing authorities and
subject to the passing of resolution 12 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 sub-paragraph (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.
92
The European Smaller Companies Trust PLC Annual Report 2026
Notice of Annual General Meeting continued
14 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
28 September 2026, 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.
15 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
29 September 2026
Registered Office:
201 Bishopsgate, London EC2M 3AE
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93
Explanations of the resolutions
The information set out below is an explanation of the business to be considered at the meeting.
Resolutions 1 to 12 are proposed as ordinary resolutions. This means that for each of those resolutions to be passed
more than half of the votes cast must be in favour of the resolution. Resolutions 13 to 15 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
in favour 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: Approve the Directors’
Remuneration report
Members are requested to approve the Directors’
Remuneration report (excluding the Remuneration Policy)
for the year ended 30 June 2026. This is set out on
pages 44 to 46 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 3 to 8: Election and re-election
of directors
Resolution 3 relates to the re-election of James Williams
who joined the Board on 1 November 2023 and was
appointed as Chairman on 24 November 2025. He has
over 30 years’ international business experience in Europe
and Asia, including nearly 20 years in the investment
banking industry.
Resolution 4 relates to the re-election of Daniel Burgess
who joined the Board on 25 November 2019. He 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 5 relates to the re-election of Katherine
Cornish-Bowden who joined the Board on 16 October
2025. Kate is a former global equities fund manager and
has extensive knowledge of the investment trust sector.
She is a former EAT director.
Resolution 6 relates to the re-election of Ann Grevelius,
who joined 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 valuable context to the investment
background. Ann is the Senior Independent Director and
Chair of the Management Engagement Committee.
Resolution 7 relates to the re-election of Nadia Meier-
Kirner who joined the Board on 28 April 2025. Nadia has
20 years’ experience in European mid-market private
equity with Triton Partners in Germany. Her presence in
the asset management sector in Europe helps the Board
stay in touch with sentiment on the Continent.
Resolution 8 relates to the re-election of Stuart Paterson
who joined the Board on 16 October 2025. Stuart has more
than 25 years’ experience of equity investing in European
private companies. He is a former EAT director.
The Board has reviewed the performance and commitment
of the directors standing for 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 28 and 29 of the annual report.
Resolutions 9 and 10: 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 2027 and seeking authority for the
Audit Committee to determine their remuneration.
Resolution 11: Dividend policy
The Company moved to paying quarterly dividends
following the completion of the combination with EAT in
October 2025. As shareholders are no longer able to vote
on the final dividend, they are invited to vote on the
Company’s approach to paying four quarterly interim
dividends in respect of each financial year.
Resolution 12: Authority to allot shares
Each year shareholders are requested to renew the
directors’ authority to allot new ordinary shares up to 10%
of the Company’s issued share capital. This resolution
seeks to renew that authority to issue up to 41,037,504
shares, with a nominal value of £641,211. This 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.
Notice of Annual General Meeting continued
94
The European Smaller Companies Trust PLC Annual Report 2026
Resolution 13: Power to disapply pre-emption
rights
This resolution will give the directors power to disapply
pre-emption rights in respect of any new ordinary shares
issued under the authority provided by resolution 12 or
sold from treasury. If renewed, 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
12 and 13 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 14: Repurchase of the Company’s
shares
Each year, the directors seek authority to repurchase up to
14.99% of the Company’s issued share capital as at the
date of the passing of the resolution. 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 28 September 2026,
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
a similar 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 of stock 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 15: Notice of general meetings
The Companies Act 2006 stipulates that the notice period
for general meetings (other than the annual general
meeting) is 21 days 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
2027. Directors will seek to renew this authority annually.
Notice of Annual General Meeting continued
The annual general meeting will be held at Janus
Henderson Investors’ offices at 201 Bishopsgate,
London EC2M 3AE. It is a few minutes’ walk from
Liverpool Street Station and from Moorgate
Underground Station.
Annual General Meeting venue
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 STR EET
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.
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95
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 12 November 2026
(the ‘specified time’) shall be entitled to attend, speak and
vote at 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 48 hours 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, Highdown
House, Yeoman Way, Worthing, BN99 3HH) before 12.30 pm
on Thursday 12 November 2026.
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,
in determining the deadline for receipt of proxies, no
account shall be taken of any part of a day that is not
a working day.
Notice of Annual General Meeting continued
96
The European Smaller Companies Trust PLC Annual Report 2026
Notice of Annual General Meeting continued
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.
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 a proxy 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 12.30 pm on 12 November 2026 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
the AGM
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 hard-copy 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’. If such 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
by section 311A of the Act, is available from the website,
www.europeansmallercompaniestrust.com.
14. Total voting rights
At 28 September 2026 (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
71,357,204 ordinary shares held in treasury. The voting
rights are therefore 339,017,841.
Strategic
report
Financial
statements
Additional
information
AGM notice
Governance
Governance
Financial
statements
Additional
information AGM notice
Strategic
report AGM notice
Shareholder
information
The European Smaller Companies Trust PLC Annual Report 2026
97
Shareholder information
Share identifiers
ISIN GB00BMCF8689 SEDOL BMCF868 Ticker ESCT LEI 213800N1B1HCQG2W4V90
Share register enquiries
Need to put in place a bank mandate or notify a change of address?
Contact the Company’s registrar Equiniti Limited.
Online
at www.shareview.co.uk or scan the QR code
A range of shareholder information is available on the website. You can check your
holding and find practical help on transferring shares or updating your details.
Telephone
on 0371 384 2472.
Lines are open from 8.30am to 5.30 pm, Monday to Friday.
Post
at Equiniti Limited, Highdown House, Yeoman Way, Worthing West Sussex BN99 6DA.
The benefits of signing up include:
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98
The European Smaller Companies Trust PLC Annual Report 2026
Contents
Strategic report
1 About us
2 Investing in the growth potential of
European companies
3 Why Europe’s smaller companies?
4 How we build the portfolio
5 Our manager: Janus Henderson Investors
6 Performance summary
8 Chairman’s statement
10 Fund manager’s report
13 Spotlight on the top ten holdings
14 Portfolio exposures
15 Key performance indicators (KPIs)
16 Business model
24 Our principal risks
26 Assessing our viability
Governance
28 Board of Directors
30 Fund management team
31 Corporate Governance report
37 Audit Committee report
40 Management Engagement Committee
report
42 Nominations Committee report
44 Directors’ Remuneration report
47 Directors’ report
49 Statement of directors’ responsibilities
Financial statements
51 Independent auditor’s report to
the members
59 Statement of Comprehensive Income
60 Statement of Changes in Equity
61 Balance Sheet
62 Statement of Cash Flows
63 Notes to the financial statements
Additional information
83 Portfolio holdings
86 Alternative performance measures
88 Historic performance and regulatory
disclosures
89 Service providers
90 Glossary
AGM notice
92 Notice of Annual General Meeting
Shareholder information
www.europeansmallercompaniestrust.com
Annual General Meeting (AGM)
The Board invites you to attend the AGM at 12.30 pm on
16 November 2026 either in person or online.
Scan the QR code for more details and to register
your attendance.
Keeping in touch
Scan the QR code to receive the latest Company updates,
market insights, event invitations and more.
Please send any general enquiries about the Company to
itsecretariat@janushenderson.com.
Warning to shareholders
Many companies are aware that their shareholders may receive 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 to be 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 it is 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 of investment ‘advice’. You can also check the FCA Warning List at
#BeScamSmart – www.fca.org.uk/scamsmart.
Key dates
Dividend payment dates for the year ending 30 June 2027
Ex-dividend date Record date Payment date
1st interim dividend 29 October 2026 30 October 2026 3 December 2026
2nd interim dividend 28 January 2027 29 January 2027 26 February 2027
3rd interim dividend 29 April 2027 30 April 2027 28 May 2027
4th interim dividend 29 July 2027 30 July 2027 3 September 2027
Financial calendar
Annual General Meeting 16 November 2026 at 12.30 pm
Half-year results 31 December 2026 (published in February/March 2027)
Financial results 30 June 2027 (published in October 2027)
Annual Report
for the year ended 30 June 2026
Telephone: 020 7818 1818
Email: itsecretariat@janushenderson.com
www.europeansmallercompaniestrust.com
The European Smaller Companies Trust PLC
Registered as an investment company in England and Wales
Registered office
201 Bishopsgate, London EC2M 3AE
SEDOL/ISIN number
Ordinary Shares:
BMCF868/GB00BMCF8689
Registration Number
2520734
London Stock Exchange
(TIDM) Code
ESCT
Global Intermediary
Identification Number (GIIN)
JX9KYH.99999.SL.826
Legal Entity Identifier (LEI)
213800N1B1HCQG2W4V90
Designed by Instinctif. Typeset by 2112 Communications, London.
Printed by Paragon.
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The European Smaller
Companies Trust PLC
Investing in the growth potential
of European companies
Annual Report 2026
The European Smaller Companies Trust PLC – Annual Report 2026