Annual report & financial statements
31 December 2025
Herald Investment
Trust plc
2025
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Herald Investment Trust’s
objective is to achieve capital
appreciation through
investments in smaller quoted
companies in the areas of
technology and
communications.
Investments may be made across the
world. The business activities of investee
companies will include technology and
communications, and the supply of
equipment and services to these
companies.
Introductory Highlights
1 Highlights
2 Company Summary
3 Year’s Summary
Investment Report
6 Company Overview
7 Geographical Analysis
8 Chairman’s Statement
10 Investment Manager’s Report
17 Classification of Investments
18 Top Twenty Equity Holdings
22 Detailed List of Investments
29 Long-Term Performance
Governance
34 Strategic Report
43 Your Board of Directors
44 Corporate Governance Report
48 Audit Committee Report
50 Directors’ Report
52 Directors’ Remuneration Report
55 Statement of Directors’ Responsibilities
56 Independent Auditor’s Report
Financial Statements
64 Statement of Comprehensive Income
65 Statement of Financial Position
66 Statement of Changes in Equity
67 Statement of Cash Flows
68 Notes to the Financial Statements
General
80 Further Shareholder Information
82 Alternative Performance Measures
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Herald Investment Trust plc
Annual report & financial statements 2025
INTRODUCTORY HIGHLIGHTS
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2025202320212019201720152013201120092007200520032001199919971994 1995
48.8
21.7
12.0
10.5
9.7
–11.1
–7.7
–4.7
–4.6
–4.4
Celestica
Trustpilot
Cogent
Communications
Corero Network
Security
Varonis Systems
Descartes Systems
Silicon Motion Technology
Vicor
BizLink
Fabrinet
HIGHLIGHTS
NAV AT 31 DECEMBER 2024
£1,252.6m
NAV AT 31 DECEMBER 2025
£1,292.4m
TOTAL RETURN
IN 2025
£98.5m –£58.7m
+ =
SHARE BUYBACKS
IN 2025
TOTAL RETURN SINCE INCEPTION
(FIGURES HAVE BEEN REBASED TO 100 AT 16 FEBRUARY 1994)
Source: LSEG Data & Analytics.
NET ASSET VALUE (“NAV”)
A
PER SHARE 31 DECEMBER 2025
£27.00
Fully diluted NAV
Share price
Deutsche Numis Smaller Companies
plus AIM (ex. investment companies)
Index
Russell 2000® Technology Index
(small cap) (in sterling terms)
TOP 5 LOSERS TOP 5 WINNERS
TOP FIVE WINNERS AND LOSERS 2025
TOTAL GAIN/LOSS IN 2025 IN STERLING TERMS (MILLIONS)
NAV PER SHARE TOTAL RETURN
SINCE INCEPTION
2,847.8%
SHARE PRICE
31 DECEMBER 2025
£24.05
CHANGE IN
SHARE PRICE
A
IN 2025
–1.0%
SHARE PRICE TOTAL RETURN
SINCE INCEPTION
2,770.8%
Share Price Total Return based on 90.9p, the 1994 CGT base subscription price for shareholders adjusting for warrants, which were issued on a 1 for 5 basis.
A Alternative Performance Measures – see pages 82 and 83.
CHANGE IN NAV
A
PER SHARE IN 2025
+8.5%
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INTRODUCTORY HIGHLIGHTS
02
Herald Investment Trust plc
Annual report & financial statements 2025
COMPANY SUMMARY
Company data at 31 December 2025
INVESTMENT OBJECTIVE
The objective of Herald Investment Trust plc (“Herald” or the “Company”) is to achieve
AND POLICY
capital appreciation through investments in smaller quoted companies in the areas of
technology and communications. Investments may be made across the world. The
business activities of investee companies will include technology and communications,
and the supply of equipment and services to these companies. The Company’s investment
policy is contained within the Strategic Report on page 34.
COMPARATIVE INDICES
The portfolio comparative indices are the Deutsche Numis Smaller Companies plus AIM
(ex. investment companies) Index in the UK and the Russell 2000® Technology Index
(small cap) (in sterling terms) in the US. Though we consider these indices to provide
reasonable bases for measuring the Company’s performance, the portfolio is not
modelled on them and outcomes may diverge widely.
MANAGEMENT DETAILS
Herald Investment Management Limited (“HIML” or the “Manager”) is the appointed
investment manager to the Company. Administration of the Company and its investments
is delegated to The Bank of New York Mellon (International) Limited and company
secretarial duties to NSM Funds (UK) Limited.
CAPITAL STRUCTURE
The Company’s share capital consisted at 31 December 2025 of 47,858,467 ordinary
shares of 25p each which are issued and fully paid. The Company has been granted
authority to buy back a limited number of its own ordinary shares for cancellation. During
the year, 2,482,394 ordinary shares were bought back and cancelled. The directors will
seek to renew this authority at the 2026 annual general meeting to be held in due course.
In addition, the board will seek a new authority to allot, or sell from treasury, a limited
number of shares for cash on a non pre-emptive basis.
MANAGEMENT FEE
HIML’s annual remuneration is 1.0% of the Company’s net asset value (excluding current
year revenue) based on middle market prices on the first £1.25bn and 0.8% thereafter,
calculated on a monthly basis, payable in arrears.
CONTINUATION VOTE
At the AGM of the Company held in March 2025, shareholders voted in favour of the
Company continuing to operate as an investment trust. The next continuation vote will be
put to shareholders at the 2028 AGM and every third year thereafter.
AIC
The Company is a member of the Association of Investment Companies.
LEGAL ENTITY IDENTIFIER (“LEI”)
An LEI is a 20-digit code which allows entities involved in financial transactions to be
identified. This is a global transparency measure endorsed by the G20. The Company’s
LEIis: 213800U7G1ROCTJYRR70
ALTERNATIVE PERFORMANCE
The alternative performance measures used in the annual report & financial statements are
described on pages 82 and 83.
None of the views expressed in this document should be construed as advice to buy or sell a particular investment.
Investment trusts are publicly traded collective investment funds. The Company is required to comply with the UK Listing Rules of the Financial Conduct
Authority (“FCA”).
SHAREHOLDERS’ FUNDS
£1,292m
MARKET CAPITALISATION
£1,151m
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Annual report & financial statements 2025
Herald Investment Trust plc
60
80
100
120
140
160
202520242023202220212020
Fully diluted NAV
Share price
Deutsche Numis Smaller Companies
plus AIM (ex. investment companies)
Index
Russell 2000® Technology Index
(small cap) (in sterling terms)
YEAR’S SUMMARY
5 YEAR TOTAL RETURN OF NAV, SHARE PRICE AND COMPARATIVE INDICES
(FIGURES HAVE BEEN REBASED TO 100 AT 31 DECEMBER 2020)
Source: LSEG Data & Analytics.
At 31 December 2025 2024 % change
Total net assets £1,292.4m £1,252.6m
Shareholders’ funds £1,292.4m £1,252.6m
Net asset value per ordinary share
A
2,700.5p 2,488.2p 8.5
Share price
A
2,405.0p 2,430.0p (1.0)
Deutsche Numis Smaller Companies Index plus AIM (ex. investment companies) (capital only) 5,963.5 5,498.8 8.5
Russell 2000® Technology Index (small cap) (in sterling terms) (capital only)
B
5,758.2 5,786.6 (0.5)
Dividend per ordinary share – –
Profit per ordinary share (revenue) 0.70p 4.96p
Ongoing charges
A
1.08% 1.08%
Discount to NAV
A
10.9% 2.3%
Total return for the year ended 31 December 2025 2024
Net asset value
A
+8.5% +12.1%
Share price
A
(1.0%) +26.4%
Deutsche Numis Smaller Companies plus AIM (ex. investment companies) Index +11.8% +5.0%
Russell 2000® Technology Index (small cap) (in sterling terms)
B
(0.3%) +25.9%
Year to 31 December 2025 2024
Profit per ordinary share
Revenue 0.70p 4.96p
Capital 198.31p 244.77p
Total 199.01p 249.73p
Year to 31 December 2025 2025 2024 2024
Year’s high and low High Low High Low
Share price 2,560.0p 1,738.0p 2,500.0p 1,870.0p
Net asset value per ordinary share
A
2,873.4p 2,058.9p 2,550.8p 2,161.0p
Discount
A
17.3% (1.3%) 13.8% (0.3%)
A Alternative Performance Measure – see pages 82 and 83.
B Investments and indices valued at USD/GBP exchange rate of 1.348 at 31 December 2025 (1.252 31 December 2024).
® Russell Investment Group.
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INVESTMENT REPORT
04
Annual report & financial statements 2025
Herald Investment Trust plc
Investment
Report
6 Company Overview
7 Geographical Analysis
8 Chairman’s Statement
10 Investment Manager’s Report
17 Classification of Investments
18 Top Twenty Equity Holdings
22 Detailed List of Investments
29 Long-Term Performance
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Herald Investment Trust plc Annual report & financial statements 2025
AI equipment suppliers are the winners.
Software companiesare undermined
by AI displacement fears.
Katie Potts, Investment Manager
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WHAT WE DO
HISTORY
OF THE COMPANY
INVESTMENT REPORT
06
Herald Investment Trust plc
Annual report & financial statements 2025
COMPANY OVERVIEW
Achieving
capital growth
Herald invests, generally on a long-term
basis, using fundamental analysis. The
technology and communications sectors
globally comprises over 5,000 quoted
companies, and many more unquoted.
The Manager focuses on investment
within the technology and
communications sector.
Focus on the sector enables
asignificant degree of
cross-referencing across competitors,
customers and suppliers globally.
Using this mosaic of information and
industry knowledge combined with
strong financial analysis, we
endeavour to add value. The evolving
nature of technology means there is
awide divergence of performance
between winners and losers, but the
winners can be spectacular.
WHAT WE DO
The Manager uses a combination of
data-driven analysis, face-to-face
meetings and deep expertise with
portfolio companies, either at Herald’s
office, virtually, through site visits or at
conferences globally, as well as
broker-hosted meetings. In addition,
Herald relies on independent industry
research and published company filings
statements, presentations, websites
and broker research.
The Company has consistently invested
in early stage companies, often
providing primary development capital,
then holding investments for long
periods, regularly providing further
capital when needed.
Many of these holdings have a high
stock specific risk and the Company
aims to offer investors a low risk way to
gain exposure to these exciting
opportunities through broad
diversification in the number of
holdings and the maturity of the
businesses.
HISTORY OF THE COMPANY
The Company was established in 1994
raising £65m to invest in UK and
European TMT (telecommunications,
multimedia and technology)
companies. In 1996 a further £30m was
raised to globalise the fund with the
recognition that TMT is a global sector
and cross-referencing across
geographies is a prerequisite for
investing within the sector.
Since 1996, no further capital has been
raised, but share repurchases totalling
£530m have been made.
Over the history of the Company, the
NAV per share, on a total return basis,
has compounded at an annualised rate
of 11.2%.
Subsequently, the market has evolved
so that the Company universe is today
more commonly referred to as
technology and communications.
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Herald Investment Trust plc
Annual report & financial statements 2025
GEOGRAPHICAL SPREAD OF EQUITY INVESTMENTS AT 31 DECEMBER 2025
†
–30 –20 –10 0 10 20 30 40 50 60 70 80
UK
North America
EMEA
Asia Pacific
£29.5m
£74.3m
–£28.3m
£36.0m
GEOGRAPHICAL ANALYSIS
*Costs including those of borrowing are accounted for at Company level.
† As a percentage of total assets.
* EMEA stands for Europe, Middle East and Africa.
CONTRIBUTION TO EQUITY INVESTMENT APPRECIATION YEAR ENDED 31 DECEMBER 2025
(STERLING, MILLIONS)
NORTH
AMERICA
38.5%
2024: 34.1%
UK
22.1%
2024: 35.5%
EMEA*
10.8%
2024: 11.7%
ASIA
12.8%
2024: 12.0%
GEOGRAPHICAL RETURNS
TIME WEIGHTED RETURN BY GEOGRAPHY YEAR ENDED 31 DECEMBER 2025*
(STERLING, PERCENT)
–10% –5% 0% 5% 10% 15% 20% 25%
UK
North America
EMEA
Asia Pacific
24.4%
18.5%
–7.2%
24.7%
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INVESTMENT REPORT
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Herald Investment Trust plc
Annual report & financial statements 2025
NAV per share gained 8.5% in 2025
with divergence reflecting the AI
boom between a strong hardware
sector and a weaker software one.
CORPORATE ACTIVITY
2025 was a year dominated by the unwanted attentions of Saba
Capital Management LP (“Saba”). Saba have blocked the board’s
proposal to give shareholders the choice between selling back to the
Company at or close to NAV or staying with the current successful
mandate. At the time of writing, it is therefore unclear whether
asolution can be found to reconcile the interests of Saba, who have
a blocking minority shareholding, and of the rest of the shareholders
who form the majority. The board continues to work hard in an
attempt to find such a solution, as they have done for many months.
Saba continue to hold some 31% of the Company’s shares, which
puts them in a position to continue over the months and years ahead
to try to take effective control by a process of attrition. If no better
solution can be found, as set out in the Company’s circular of
12January 2026, the board would be left with no good alternative
but to launch a further tender (the “Backstop Tender”), requiring only
a simple majority for approval. This would in all probability spell the
end of the Company with its current mandate and management, but
would at least allow all shareholders to exit at close to NAV at a time
before Saba might gain effective control of the board and/or the
management of the Company. The almost unanimous desire of
non-Saba shareholders to avoid being in a Saba controlled vehicle is
demonstrated by the unequivocal support for the Company in
January 2025 at the requisitioned general meeting, when 99.8% of
non-Saba votes cast were against Saba’s attempt to foist their own
nominees onto the board, and again at the Company’s AGM in March
2025 where 99.9% of non-Saba votes were cast in favour of
continuation.
The consistent theme of Saba’s actions is the threat to seek to
replace the Company’s board with their own nominees (requiring
only a 50% approval of those voting), with the likely intention that the
new board then appoint Saba in due course to run the Company. The
board naturally deplores such an approach, as it oppresses the
interests of the numerous small shareholders who collectively make
up a majority of the register and it has therefore raised the matter
with the Financial Conduct Authority (‘the FCA’). In the board’s view,
where a substantial shareholder nominates a director to the board of
a company, and such substantial shareholder is then also proposed
to be appointed as the investment manager of that company (being
a'relevant related party transaction' under the UK Listing Rules), that
director should not be entitled to vote on the appointment of the
investment manager who nominated them in the first place. This
would bring such a decision in line with the general guidance that
non-independent directors cannot vote on matters between the
company and the investment manager.
This is an appropriate moment to thank the many shareholders who
have taken time and trouble to vote. It is deeply regrettable that so
much money and time, including shareholders’, should have been
taken up in this matter when the business of the Company is to get
on and make good returns for all the savers invested with it.
2025 PERFORMANCE
2025 was yet another good year for the Company. It achieved a +8.5%
NAV per share uplift in the year, taking to +2,847.8% the uplift since
inception in 1994 and +206.4% over the last ten years. In headline
terms, but for the weakness in the year of the US Dollar, the NAV uplift
in 2025 would have been circa 10%, recognising that in a global
portfolio with many internationally diversified companies, the actual
effect of currency swings is more complex, and in this year, probably
greater, than headline numbers suggest.
The Manager’s report on pages 10 to 16 covers in more detail the
contributors to the performance.
In summary, in sector terms, the technology hardware and
semiconductor sector which accounted for 28.3% of the opening
equity portfolio, delivered all the positive return, and more, whereas
the large software and technology services sector, accounting at the
0
500
1,000
1,500
2,000
2,500
3,000
2025202420232022202120202019201820172016
NET ASSET VALUE PER SHARE
(PENCE)
1,083.2
1,374.9
1,307.9
1,668.1
2,285.3
2,719.3
2,099.1
2,219.2
2,700.5
2,488.2
The board continues to have
confidence in the long-term
prospects for the Company
provided the dysfunction on the
share register can be resolved.
ANDREW JOY, CHAIRMAN
CHAIRMAN’S STATEMENT
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Herald Investment Trust plc
Annual report & financial statements 2025
start of the year for 42.2% of the equity portfolio, delivered a negative
return. In broad terms the strong performance of the first and the
weak performance of the second had at least in part a common
cause: the AI boom has propelled technology hardware stocks and
put doubts over the valuation of software stocks. Four stocks within
the hardware sector, namely Super Micro Computer, Celestica, BE
Semiconductor Industries and Fabrinet, accounted for a remarkable
72.6% of the Company’s return. These stocks typify the Manager’s
approach, having been held for many years and collectively having
multiplied in value by nearly 25 times.
The performance of the other sectors in the Company’s portfolio,
comprising in aggregate less than 30% of both opening and closing
equity portfolios, was mixed.
The geographic performance took its lead from the sector
performance, with the strong North American performance largely
afunction of the weight of AI exposure. The return of +17.5%
compares with the sterling total return of the Russell 2000
®
Technology Index (small cap, £) of –0.3%. By contrast, the UK
portfolio returned –7.2%, reflecting the larger concentration in
software and media stocks. The comparator index, the Deutsche
Numis Smaller Companies plus AIM (ex. investment companies)
Index, returned +11.8% on a total return basis, although when the
index is restricted to technology stocks, it was down –11.5%. Asia,
with its focus on hardware and semiconductors, performed very
strongly with a return in year of +24.3%. Europe, Middle East and
Africa also delivered strong returns of +23.9%, on a broad basis with
no single investment or sector dominating.
As noted by the Manager, the unwanted attentions of Saba have
adversely affected the Company in two ways – three if you account
for the inordinate amount of time having to be spent on corporate
affairs rather than fund management. Firstly, conscious of the need
potentially to fund a tender, the Manager has felt inhibited from
making all the new investments it would normally make for fear of
having to sell these again a short while later, incurring costs and
possible volatility in doing so. The Company usually buys stocks with
a horizon of at least five years. Secondly (and in part, consequently)
cash and liquid securities accounted by year end for 15.8% of the
NAV, a materially higher proportion than historically, and a drag on
performance.
Looking at the share price performance over the year, this has lagged
NAV. I note that, at the start of the year, the share price had been
driven up by Saba’s campaign to buy 29.9% in pursuit of effective
control. On occasion Saba was buying shares at a premium.
LIQUIDITY AND CAPITAL ALLOCATION
During the year the Company continued to buy shares back, with
4.9% of the opening share capital bought back in the
year, taking the
total bought back since 1 January 2023 to 23.0%. The board has
paused buy backs in the face of Saba’s continued campaign to take
effective control: although only allowed by the Takeover Code to buy
29.9%, Saba was benefiting from the denominator effect of the
Company shrinking its share base, leading to its present position of it
owning some 31% of the Company. Takeover Code rules do not
require Saba to make a general offer to shareholders in those
circumstances as it benefits from what is referred to as ‘The Innocent
Bystander’ status under these rules. To avoid delivering creeping
0%
2%
4%
6%
8%
10%
12%
2025202420232022202120202019201820172016
SHARE BUYBACKS
(PERCENTAGE OF SHARES OUTSTANDING)
4.0%
9.7%
3.8%
2.0%
2.3%
2.3%
1.6%
4.0%
10.3%
4.9%
control to Saba, the board has paused further buybacks after
consulting with other large shareholders.
It is worth noting that since its inception, the Company has bought
back shares totalling some £530m which compares with the total
amount of capital raised of £95m, and still retained a NAV of £1,292m
at year end. How many other investment trusts have exhibited
asimilar capital discipline over the years?
OUTLOOK
As I said last year, the board continues to believe that an active
manager with the right skills and experience can achieve excellent
returns in this dynamic sector. Index trackers do not reach down into
the small and very small levels of the market. There are some 5,000
companies worldwide which fall within the mandate and sorting the
wheat from the chaff adds a lot of alpha. To achieve success, the
board supports the Manager’s view that a portfolio of technology
stocks needs to be global: trends and opportunities in different parts
of the globe inform decisions in other parts.
Since the year end, there has been marked volatility in technology
stocks, especially software companies. The Company’s own portfolio
has not been immune but is up 2% at the time of writing, reflecting
the benefit of the shift away from software in favour of hardware
noted above.
Provided that the Company’s shareholder register can be sorted out,
with short term investors given the opportunity to leave and genuine
medium and long-term savers remaining, there remains good reason
to have continued confidence in the long-term prospects for the
Company.
I would like to conclude by thanking my fellow directors, the
Manager and the board’s advisers for their commitment over the last
12months to doing the right thing by all our shareholders. This has
involved a time commitment way beyond what is expected.
ANDREW JOY
CHAIRMAN
20 February 2026
SHORT SUMMARY OF RECENT
EVENTS
The Company issued a circular on 12 January 2026 setting out
aproposed tender (the “Tender Offer”) to offer shareholders the
choice of selling up to 100% of their shares for cash at close to NAV
or remaining invested. The board had assessed that it was not
sustainable to do nothing given that a process of attrition might
eventually see Saba able to win asimple majority vote even though it
itself is a minority shareholder, and thus take effective control of the
Company.
The board and the Manager continue to have confidence in the
Company's strategy, believing there to be attractive long-term
investment opportunities within quoted smaller companies in the
global technology and communications sectors. The Tender Offer
was proposed to enable the Company to focus on delivering strong
investment returns with a supportive and stable Shareholder base. It
was dependent on Saba not voting against the tender and tendering
its shares. If the Tender Offer did not proceed, a subsequent Backstop
Tender Offer (the “Backstop Tender”) would be proposed which
required only 50% of votes in favour to pass, versus the 75% of votes
in favour required for the initial Tender Offer.
Given Saba voted against the Tender Offer, the Company cancelled it
on 3 February 2026. The board have temporarily deferred launching
the Backstop Tender because it is in discussions with Saba in an
attempt to reach a mutually acceptable outcome. This would again
be for a tender offer giving shareholders the choice to tender up to
100% of shares for cash, with Saba agreeing to both vote in favour
and tender their shares. However, if discussions do not lead to a
mutually acceptable outcome, in view of the fact that Saba voted
against the Tender, the board will launch the Backstop Tender. In that
way shareholders would have an opportunity to exit their investment
in the Company at a price close to the NAV and at a time before Saba
might gain control of the board or the management of the Company.
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Herald Investment Trust plc
Annual report & financial statements 2025
0
20
40
60
80
2021 2022 2023 2024 2025
PLACINGS AND IPOs
(STERLING, MILLIONS)
0
100
200
300
400
500
600
2021 2022 2023 2024 2025
AIM HOLDINGS
(STERLING, MILLIONS)
0
20
40
60
80
100
120
2021 2022 2023 2024 2025
TAKEOVERS*
(STERLING, MILLIONS)
*Announced basis.
AI delivers returns and
gives the sector an
exciting future.
INVESTMENT MANAGER’S REPORT
The instability in the share register and the accumulation of
ac.31% shareholding by funds advised by Saba Capital
Management, L.P. (“Saba”) together with their requisition of a
general meeting in January 2025 has provided a cloud over
the year and meant we have run higher cash levels, whilst
minimising new positions in more illiquid investments, which
has been part of our process over 30 years. Nevertheless, I
am pleased to report further growth in the net assets per
share of 8.5%. All the overseas regions delivered strong
returns, but the UK lagged. More unusually the positive
returns have been concentrated in a handful of stocks in the
technology hardware sector. In fact, this sector has delivered
a total return of £127.0m in the year versus the total return of
the Company, net of expenses, of only £98.5m. The software
and technology services sector, which started the year as the
biggest sector (42.2% of equities) had a further dull year with
atotal return of –3.1%, and media, which started the year
with a10.5% weighting, a desultory –21.2%.
Sector Performance
If the challenges posed by Saba have been the cloud, then
the artificial intelligence (AI) supply chain has been the
shining driver to performance. The table below quantifies this
over the last cycle. In 2025 the technology hardware and
semiconductors sector delivered 129% of the total return of
the Company, although it only accounted for 26.4% of the
assets at the start of the year. Furthermore, the sector
accounts for 66.0% of the total returns over six years,
although only weighted at 18.8% at the start of this period.
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Annual report & financial statements 2025
Net Asset Value £m % of total NAV
Tech Hardware Tech Hardware
and Software and and Software and
Total NAV Semiconductors Tech Services AI 4 Semiconductors Tech Services AI 4
31/12/2025 1,292.4 402.6 391.3 120.3 31.2% 30.3% 9.3%
31/12/2024 1,252.6 330.2 493.6 101.0 26.4% 39.4% 8.1%
31/12/2023 1,245.8 336.5 457.8 113.3 27.0% 36.8% 9.1%
31/12/2022 1,305.0 312.6 498.9 66.0 24.0% 38.2% 5.1%
31/12/2021 1,760.9 384.7 751.5 50.1 21.8% 42.7% 2.8%
31/12/2020 1,503.4 291.4 655.1 34.1 19.4% 43.6% 2.3%
31/12/2019 1,122.8 211.3 455.8 25.4 18.8% 40.6% 2.3%
Return £m % of total return
Tech hardware Tech hardware
Total and Software and and Software and
return semiconductors tech services AI 4 semiconductors tech services AI 4
Return 2025 98.5 127.0 –13.6 71.5 129.0% –13.8% 72.6%
Return 2024 134.3 63.5 69.4 67.8 47.3% 51.7% 50.5%
Return 2023 48.1 69.4 –15.5 90.0 144.3% –32.2% 187.0%
Return 2022 –405.5 –75.9 –162.3 14.1 18.7% 40.0% –3.5%
Return 2021 280.4 99.5 72.9 16.1 35.5% 26.0% 5.7%
Return 2020 405.4 86.7 197.4 8.2 21.4% 48.7% 2.0%
Return 2020 - 2025 561.1 370.3 148.3 267.8 66.0% 26.4% 47.7%
Investment realised gains £m
Total Tech hardware
realised and Software and
gains semiconductors tech services AI 4
2025 137.3 46.2 54.4 49.2
2024 120.4 75.0 37.6 76.5
2023 40.0 39.5 6.3 38.0
2022 101.8 12.2 70.2 0.0
2021 137.5 17.1 52.9 0.7
2020 119.7 32.0 51.6 0.0
2020 - 2025 656.7 222.0 273.1 164.3
Over this six year period there have been 137 holdings in the
sector, and 90 in 2025 alone. However, there have been four
stand-out contributors that are labelled AI 4 in the table
above. These are Super Micro Computer, Celestica,
BESemiconductor Industries and Fabrinet. They alone have
accounted for 72.6% of the Company’s return in 2025 and
47.7% over six years. It also interesting to see that we have
realised gains on these four holdings of £164m in the six years
(and £176m over the life of the Company), the current value is
still £120m against a residual book cost of £4.9m. This gives
a24.3x return. Of this, about half is multiple expansion and
half profits growth. A stark reminder of the power of fashion!
In contrast the software and technology services sector,
which accounted for 39.4% of the Company’s net assets at
the start of the year and included 162 holdings in the year,
delivered anegative return. This sector led the returns in the
last cycle (2019-22) when software-as-a-service was the
fashion, and valuations rose to 30x revenue multiples and
more. We sold some too early, some well and clearly should
have sold more given the 2022 correction, but we did at least
move decisively in the right direction and added a little to
Super Micro and Celestica. The 2022 correction was clearly
the fashion element evaporating and 2024 saw some
recovery. The headwind this year has been concerns that AI
will make software much easier to develop thereby reducing
barriers to entry. In addition, the major players have pushed
through price rises and budgets have been diverted to AI
initiatives, so revenue growth has generally slowed, but there
has been acontinued derating. The other concern about the
software product sector is that it is swilling in stock-based
compensation, which analysts never account for in forecasts,
so p/e ratios are a bit fictitious in the US in particular.
The returns of the other sectors represented in the portfolio
are shown in the table below, and patchy results are evident.
The media sector has been poor and will be discussed more
in the UK analysis. A particular headwind has been the
hyperscalers diversion of resources to AI capital expenditure,
who have historically been lavish spenders for a number of
holdings in the media sector. Industrial products have been
abright light. Again a number of holdings in all regions have
benefited from the AI infrastructure spend.
Valuation Valuation Valuation Valuation
at 31-Dec at 31-Dec at 31-Dec at 31-Dec
2024 2025 2024 2025
(£m) (£m) IRR (%) (%)
Software & Tech
Services 493.6 391.3 –3.1% 42.2% 36.0%
Tech Hardware &
Semiconductors 330.2 402.6 39.7% 28.3% 37.0%
Media 122.4 78.1 –21.2% 10.5% 7.2%
Industrial Products 90.2 102.1 34.9% 7.7% 9.4%
Industrial Services 33.4 24.6 –18.7% 2.9% 2.3%
Telecommunications 32.5 20.0 –37.5% 2.8% 1.8%
Other 66.4 69.5 18.1% 5.6% 6.3%
Total equity portfolio 1,168.6 1,088.2
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Analysis by Region
If at the sector level there has been a swing to hardware and
the AI capital expenditure boom, there has also been
ageographical cycle. The UK has been particularly hard hit
by heavy redemptions from retail funds for another year, and
the lack of exposure to the AI capital expenditure supply
chain. In part it is evident that the exceptionally high savings
rate in the covid era, coinciding with negligible interest rates,
led to heavy flows into funds which were focused on the
growth sector of technology. It appears that this investment
was temporary. This has resulted in a further derating of UK
holdings of c10%, so that valuations are nearly as low as they
were in the global financial crisis.
Portfolio p/e by region
North Total
UK America EMEA Asia Equities
2013 16.9 20.9 14.9 9.6 16.8
2014 15.8 19.2 13.4 12.3 16.1
2015 16.4 20.1 16.3 13.2 16.9
2016 15.9 20.7 17.5 13.1 16.7
2017 19.6 27.8 21.4 14.8 20.7
2018 15.9 24.0 17.7 16.3 17.7
2019 21.7 27.9 25.0 20.7 23.2
2020 26.2 45.0 34.9 25.0 30.7
2021 23.8 29.4 33.3 23.0 25.9
2022 16.7 17.9 24.1 16.9 17.8
2023 16.0
22.3 30.4 21.5 19.6
2024 16.6 23.3 29.2 20.5 19.7
2025 15.0 24.1 24.3 19.7 20.5
SECTOR PERFORMANCE
(STERLING, MILLIONS)
Market value % of Total return %
equity portfolio equity portfolio equity portfolio IRR
31 Dec 2025 31 Dec 2025 31 Dec 2025 2025
Software 351.8 32.3 –6.4 –1.7
Technology Hardware 238.1 21.9 99.3 53.3
Semiconductors 164.5 15.1 27.7 20.7
Electrical Equipment 60.0 5.5 21.2 47.4
Internet Media & Services 40.2 3.7 –13.8 –25.6
IT Services 39.5 3.6 –7.2 –12.4
Industrial Intermediate Production 25.7 2.4 7.2 32.0
Commercial Support Services 23.8 2.2 –6.3 –18.3
Telecommunications 20.0 1.8 –12.8 –37.5
Advertising & Marketing 16.4 1.5 –11.0 –32.2
Other 108.2 10.0 13.7 12.5
Total 1,088.2 100.0 111.6 10.3
Source: BICS (Bloomberg Industry Classification Standard) and HIML.
REGIONAL ALLOCATION CHANGES
(STERLING, THOUSANDS)
Valuation at Net Valuation at
31 December acquisitions/ Appreciation/ 31 December
2024 (disposals) Amortisation (depreciation) 2025
Equities*
UK 444,846 (125,047) – (33,974) 285,825
North America 427,253 (1,888) – 72,858 498,223
EMEA 146,260 (34,991) – 28,074 139,343
Asia Pacific 150,251 (18,978) – 33,556 164,829
Total equities 1,168,610 (180,904) – 100,514 1,088,220
Government bonds 61,417 19,700 755 (1,645) 80,227
Total investments 1,230,027 (161,204) 755 98,869 1,168,447
Net liquid assets 22,575 102,126 – (735) 123,966
Total assets
+
1,252,602 (59,078) 755 98,134 1,292,413
* Equities includes convertibles and warrants.
+ The total assets figure comprises assets less current liabilities.
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The exciting thing is that the AI returns have kept the
NAV/share increasing over a period of useful derating for the
majority of the portfolio from the frothy levels of 2020-21.
Inaddition, the expectation that we shall have to buyback the
shareholders who are not long-term investors in our strategy
has led to a deliberately higher level of cash and a focus on
investments with more liquidity in overseas markets. A further
net £125m has been sold from the UK portfolio in 2025,
taking the total since the beginning of 2015 to nearly £500m.
Valuation of equity portfolio
Net
Valuation at purchases/ Gains/ Valuation at
31-Dec-2024 sales (losses) 31-Dec-2025
(£m) (£m) (£m) (£m)
UK 444.8 –125.0 –34.0 285.8
North America 427.3 –1.9 72.8 498.2
EMEA 146.3 –35.0 28.1 139.3
Asia 150.2 –19.0 33.6 164.8
Total 1,168.6 –180.9 100.5 1,088.2
Looking over a longer timeframe, as we have done with sectors, the trends are quantified in the table below.
Equities (£m) % of total NAV
Total
NAV North North
(£m) Asia EMEA America UK Asia EMEA America UK
31/12/2025 1,292 165 139 498 286 12.8% 10.8% 38.5% 22.1%
31/12/2024 1,253 150 146 427 445 12.0% 11.7% 34.1% 35.5%
31/12/2023 1,246 144 150 342 504 11.5% 12.1% 27.4% 40.5%
31/12/2022 1,305 145 141 284 576 11.2% 10.8% 21.8% 44.1%
31/12/2021 1,761
208 201 392 839 11.8% 11.4% 22.3% 47.7%
31/12/2020 1,503 152 129 367 741 10.1% 8.6% 24.4% 49.3%
31/12/2019 1,123 77 67 258 586 6.8% 6.0% 23.0% 52.2%
Returns to year ending 31 December (£m) % of total return
Total North North
return Asia EMEA America UK Asia EMEA America UK
2025 98.5 36.0 29.5 74.3 –28.3 37% 30% 75% –29%
2024 134.3 4.8 8.4 115.4 15.7 4% 6% 86% 12%
2023 48.1 19.6 6.3 85.9 –50.7 41% 13% 179% –105%
2022 –406.0 –56.1 –54.6 –75.9 –212.3 14% 13% 19%
52%
2021 280.4 31.0 63.0 39.5 163.4 11% 22% 14% 58%
2020 405.0 53.4 43.0 139.2 183.7 13% 11% 34% 45%
2020 - 2025 560.3 88.7 95.6 378.4 71.6
Investment realised gains (£m)
Total
realised North
gains Asia EMEA America UK
2025 137.3 18.2 27.8 63.2 27.5
2024 120.4 5.0 9.4 68.5 39.2
2023 40.0 1.2 4.2 36.2 2.5
2022 101.8 10.3 5.4 37.5 45.3
2021 137.5 22.8 3.3 40.5 71.0
2020 119.7 8.5 11.5 56.6 42.2
2020 - 2025 656.7 66.0 61.8 302.5 227.8
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INVESTMENT MANAGER’S REPORT CONTINUED
North America
The IRR of the North American portfolio in 2025 was +17.5%
versus the sterling total return for the Russell 2000
Technology Index of –0.3%. It frustrates me that a number of
UK investors think the US is “tech utopia”. Valuations are often
too high and management teams obsessed with revenue
growth build huge losses exacerbated by overly generous
stock-based compensation, which unfortunately makes it the
obvious market to raise capital, but less obvious that it is the
market in which to invest. It is particularly pleasing therefore
that we have trounced the comparative index this year again
through the AI exposure described above. Ironically, of the
three North American Holdings in our AI 4, only one is
actually a US company- Super Micro Computer, which has
positively contributed to the Company’s returns each year
from 2019 to 2024, returning a small loss in 2025. The
cumulative return is £116.5m making it the most profitable
investment in Company’s history. This year the leadership
came from the Canadian domiciled Celestica returning
£48.8m, which supplies the hyperscalers and Google in
particular. Second best has been Fabrinet, a Cayman Island
company with operations primarily in Thailand. It has returned
£21.7m in 2025 and £48.7m since first acquired on a p/e of
10.2x in 2013. Vicor and Silicon Motion Technology (Cayman
domiciled, but Taiwanese operations) also contributed c£10m
each, both of these holdings had an AI kicker to demand, so
in aggregate the technology hardware and semiconductors
sector delivered a return of £95.0m from 29 holdings in the
year. The 48 holdings in the software and tech services sector
delivered a modest negative return of 7.9% with no standout
positions, albeit the long held significant software holdings of
Descartes Systems, Varonis Systems and SPS Commerce all
drifted. Cogent Communications, an acquisition driven
internet infrastructure company, proved the biggest loser with
price pressure, costs pressures and debt a challenge.
There were eight Israeli companies with NASDAQ listings in
our North American bucket, now reduced to seven following
the CyberArk Software takeover. Their IRR was +31.8%, and in
sterling terms offset the –3.7% loss on the 88 US domiciled
companies held. Israel was outshone by Canada +55.4% led
by Celestica, and the Cayman Islands +73.0% reflecting
Fabrinet and Silicon Motion Technology’s strong returns.
The 13 holdings in the industrial products sector returned
+44.6% led by laser company nLight. The common theme is
that manufacturing companies have generally performed
better than software, media and I.T. service companies. As
Trump reminds us bluntly, the US has exported manufacturing
primarily to Asia, as has the UK, so that has been a headwind
for these regions. The market was evidently unsettled by the
introduction of tariffs. We are fortunate to be in regular
contact with scores of management teams around the world
and most companies see little adverse effect on their trading.
The smaller companies’ market in the United States is under
pressure from withdrawals from active management in favour
of index trackers and companies remaining private for longer.
There are now only 432 companies in the Bloomberg
technology and communications sectors in North America
with a market capitalisation of between $100m and $5bn so
afurther small decline in 2025. There is a big pipeline of
venture backed companies that might come to market, but
the valuations have to be more realistic than the crop that
came to market in 2020-21.
UK
The UK returns to some extent mirror the software returns
with a strong covid period and subsequent anaemic
performance. The IRR for 2025 of –7.2% is disappointing
relative to the Deutsche Numis Smaller Companies Index plus
AIM (ex. investment companies) total return of +11.8% and the
returns from the overseas regions. However, the sector return
within the Deutsche Numis index for technology is –11.5%
and the media sector is –27.2%, therefore relative to our
sectors the return shows solid outperformance. Just as we
were decisively taking profits in software companies in 2021,
we were also decisively reducing the UK portfolio. In both
cases we moved in the right direction, but not fast enough.
Liquidity proved an inhibitor particularly when the market
turned, but we could have done more. Trends always move
further than rational on the upside and the downside.
Iobserve that basic materials weighting in the index has risen
to 7.7% and technology has fallen to only 4.2%. Basic materials
has returned +65.3% led by precious metals and mining!
The media sector has accounted for 80.1% of the UK decline,
with Trustpilot alone declining £11.1m. This is in spite of
Trustpilot’s trading performance, delivering on expectations
with annual recurring revenue growth rising 21% year on year
in the interims. There has been a bear raid from short sellers,
and we are sceptical of their negativity, accusing the
company of rigging outcomes, which the company
vigorously and credibly denies. Two small holdings in the
software sector, Corero Network Security and Celebrus
Technologies both lost more than £4m, but we remain
confident long-term. Volex (+£6.8m) and Diploma (+£5.5m)
were the two best performing stocks. Interestingly they were
also beneficiaries of the AI capital spending boom in some of
their activities, with a Volex subsidiary supplying active
electrical cables for connectivity, and Diploma copper cables.
Few of the UK investments have a predominantly domestic
market. Technology is an international sector and the majority
of revenues and profits are derived in overseas markets. The
strength of sterling relative to the dollar is a headwind to
profits growth, particularly for the numerous companies
which are overweight sterling costs versus dollar revenues.
Whereas we were purposefully selling UK holdings on valuation
grounds in 2020-21, this year’s increased pace of selling
0
2
4
6
8
Science
Group
Centaur
Media
ActiveOpsDiplomaVolex
TOP 5 WINNERS BY REGION – UK
(IN STERLING £M)
0
10
20
30
40
50
JFrogSilicon Motion
Technology
VicorFabrinetCelestica
TOP 5 WINNERS BY REGION – NORTH AMERICA
(IN STERLING £M)
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reflects more a desire to increase cash levels and reduce the
most illiquid region of the portfolio in the expectation that at
some stage the Company may have to undertake a tender
offer. The UK market is in a sorry state and the flight of capital
has continued throughout 2025. Whilst Iam nervous about
longer term prospects, because the flight of capital has led to
an evaporation of the skillset in London, in the short-term there
are some stocks trading at very good valuations and it would
be a shame to have to sell more into this unwilling market.
Asia
Asia has been a strong market this year, the portfolio sterling
IRR of 24.3% has been achieved despite currency headwinds,
with a number of hardware companies in the AI hardware
and AI semiconductor supply chains seeing extraordinary
revenue growth, benefitting from massive growth in AI data
centre capital expenditure and from rising prices for their
products. The scale of the hyperscaler AI capex spend is
remarkable, growing from $250-300bn in 2024, to perhaps
$400bn in 2025 with some analysts forecasting annual capex
spend of $1-2tn by 2030. Some individual data centre sites in
North America will require capex of over $10bn. A substantial
proportion of this spend is on AI servers and AI network
switches which have the majority of the hardware value
produced in Asia. The biggest beneficiary of direct AI spend
to date has been Nvidia (now the largest company globally
by market capitalisation), they are the leading provider of
AIchips and AI interconnect and have close to 75% gross
margins. Hence, for every $1 spent with Nvidia, 25 cents is
spent with its suppliers, who are often in Asia. Google’s AI
ecosystem is based around a semiconductor called a TPU; it
is also enjoying remarkable growth, which is passed onto
Google’s supply chain, again often located in Asia.
To deliver AI requires compute, memory, storage and
connectivity. All of these elements require enormous
electrical power and power transformation equipment. The
scale of demand is immense with data centre electricity
consumption forecast to more than double to around 945
TWh by 2030. This is slightly more than Japan’s total
electricity consumption today. A number of data centre
companies are committed to building their own nuclear
power stations and making substantial investments in
renewable energy. The Asian portfolio has numerous holdings
that supply materials and components into companies
supplying into this AI datacentre capex spend. They include
BizLink (Active Electrical Cables (AEC) for data and power
cables), Elite Material and Taiwan Union Technology (Copper
Clad Laminates (CCL) used in advanced AI and networking
PCBs), MPI (probe cards for semiconductor test), Winway
Technology and ISC (semiconductor test sockets), Kulicke &
Soffa Industries (bonding machines for advanced
semiconductors), ASMPT (bonding machines for advanced
semiconductors), eMemory Technology (PUF based security
IP to incorporate in semiconductors) and Chroma ATE
(advanced semiconductor test equipment).
0
3
6
9
12
15
Electro Optic
S
y
stems
KaonaviCatapult
Sports
Tripod
Technolo
gy
BizLink
TOP 5 WINNERS BY REGION – ASIA
(IN STERLING £M)
Companies in the portfolio developing innovative new
products to address AI datacentre demand include: Voltronic
Power Technology (power supplies), Musashi Seimitsu
Industry (hybrid super capacitors), FOCI Fiber Optic
Communications (fiber array units), Himax Technologies
(micro-lens arrays for TSMC’s COUPE (silicon photonics)).
In addition, there are a number of holdings of semiconductor
capital equipment manufacturers that supply into both
memory and logic fabs. Until recently the wider DRAM and
NAND memory industries have been in a multi-year cyclical
downturn with weak demand. AI demand for High Bandwidth
Memory (HBM) based on DRAM, and to a lesser extent better
NAND demand, has transformed memory pricing and the
profitability of Samsung Electronics, SK Hynix and Micron
Technology. It is anticipated that as a result the capital
expenditure of these companies will now rebound,
transforming the prospects for a number of the Company’s
semiconductor equipment manufacturing holdings, potential
beneficiaries include Wonik IPS, Eugene Technology, Tokyo
Seimitsu and Park Systems. There is great uncertainty as to
how long this elevated period of AI related capex will last.
AI is the hot topic and major global technological innovation of
the time, but the sources of the performance of the Company’s
small company portfolio are actually quite diverse and not
reliant on AI hype and concept valuations. AIrelated names are
a minority of the Asian portfolio. Although, the biggest
individual contributor to the Asian performance is the AI related
BizLink, which appreciated +156% (£12m), strong percentage
returns were seen from numerous holdings, many not AI
related. Some of these gains were due to takeovers and include
Kaonavi (HR software in Japan) and Proto (Car dealership
software in Japan) others were due to strong revenue and
profit growth in niche growth markets. Examples here include
Electro Optic Systems (Laser based drone defence systems
(Australia)), Catapult Sports (A leading sports analytics company
(Australia)), RFHIC (GAN power amplifiers for defence and
industrial heating applications (Korea) and finally Genians
(Dominant Korean supplier of network access and zero trust
software).
In contrast to the shrinking number of public companies in
the sectors targeted in the West the number in Asia
continues to grow. Six new holdings were added in Asia in
the year including Acer Cyber Security, AP Memory
Technology, Innodisk, Kinsus Interconnect Technology, MPI
and Voltronic Power Technology. In fact, the number of
companies in technology and communications with a market
capitalisation between $100m and $5bn is 453 in Taiwan, in
Japan 380, South Korea 273 and China many more.
However, in the United States only 395. A number of Asian
companies are moving rapidly up the value chain.
Europe, Middle East and Africa
0
2
4
6
Nordic
Semiconductor
PFISTERERWALLIX Median
Technologies
LUMIBIRD
TOP 5 WINNERS BY REGION – EMEA
(IN STERLING £M)
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INVESTMENT MANAGER’S REPORT CONTINUED
The European market was unusual in providing a currency
tailwind for sterling investors with the Euro appreciating against
sterling by 5.4%. The IRR was a pleasing +23.9%. 83% of the
EMEA portfolio is invested in two core sectors; technology
hardware and semiconductors, which returned +11.5%, and
software and technology services, which returned +26.8%.
Returns were broad based, led by software companies which
provided slightly more than half the sterling gains of £29.5m.
These software businesses address a range of applications, with
the significant contributors including Median Technologies
(AIlung cancer screening), WALLIX (Privileged Access
Management) and RaySearch Laboratories (radiotherapy
treatment planning). Other significant contributors were
LUMIBIRD (lasers for medical, defence and industrial
applications), PFISTERER (high-voltage cable accessories) and
Nordic Semiconductor (Bluetooth Low-Energy wireless
connectivity). Each contributed a gain of circa £4m in the year.
A headwind for the European portfolio going into the year was
the high proportion of cash and outstanding takeovers, with
Volue having settled late in 2024 and Esker and Nexus, in
aggregate 21% of the EMEA portfolio by value, settling in
February and April. Pleasingly, as well as adding to existing
positions, we have managed to redeploy capital into eight new
holdings. PFISTERER, the only European IPO invested in, was
the IPO of the year in terms of performance, rising +183% from
its IPO price. We have also made post-IPO investments in
Planisware (marginally above the IPO price) and HBX Group (at
a significant discount to the IPO price). Our other new positions
are Comet, Louis Hachette, NCAB, STREAMWIDE and Vivendi.
Our largest position, BE Semiconductor Industries, is one of the
four AI beneficiaries described earlier. It was first acquired in
2011 and has since returned £55m, of which £30m has been
generated in the last six years, though the shares have been
relatively flat since 2023. The company is the market leader in
hybrid bonding systems, which we view as critical to enabling
the next wave of advanced packaging innovation.
Drivers of the Company’s challenges
The challenges posed by Saba are arguably only one factor.
Saba would not have accumulated such a large stake if there
had not been willing sellers, albeit Saba’s buying reduced the
discount to a level that was too low versus other trusts with
more liquid assets, providing shareholders with a tempting
exit. It is depressing that over the last three years we have
repurchased 14.3m shares, or 23% of the share capital,
including 2.5m shares repurchased in 2025. Over the same
period Saba has acquired 14.7m shares, so there has been net
selling of 47% of the register. It is bewildering that we have
had such heavy selling pressure, whilst continuing to perform.
We speculate on the reasons:
(i) Regulatory pressure for wealth managers and advisors
to minimise “double fees” when they invest in funds
following the Consumer Duty legislation- albeit our
smaller companies focus gives them access to
investments that they would not otherwise be exposed
to.
It is evident that this has contributed to enormous
outflows across collective vehicles in the UK.
(ii) The underperformance of the small companies sector
compared to the Magnificent Seven.
(iii) The incentive ahead of tax rises for investors to realise
profits when they enjoyed heavy capital gains. I am
pleased to say that we have not raised new capital since
1996, so many investors do have book costs that are less
than 10% of market value, which may also have become
overweight in their portfolios. Selling was particularly
heavy ahead of the UK Budget in the Autumn of 2024.
(iv) The consolidation of wealth managers and regulatory
pressure for them to deliver uniform returns across their
client base has led to a focus on very large liquid
investments.
(v) The cash flows out of active managed funds into lower
cost index trackers. It infuriates me that active
management seems to be perceived as an unnecessary
extravagance. Of course, on average active
management will underperform, because we have costs,
but index trackers are dumb money, and do not provide
capital to growth companies. I would rather
underperform a market growing by 15% a year by
apercent or two than perform in line with a market
growing at 3% a year, although we do have a long track
record of outperforming relevant indices. If growth
companies are not funded, the market will not grow.
(vi) Quite rightly there is regulatory pressure to ensure
liquidity in open ended funds, but there is a lack of
stable long-term capital that insurance companies and
pension funds used to provide in the London market.
This has led to a capital shortage.
I still passionately hope that there will be a route to
continuation such that we can continue to invest in an
exciting sector. I believe that there is a valuation arbitrage
between small companies below the size that attracts flows
from index trackers and it is evident that we have benefitted
from investing in stocks that have grown into the more
expensive category which is included in indices. I also believe
that we target a global sector and the intelligence derived
from looking at companies across the globe has been a vital
contributor to our ability to outperform. Having a large
number of positions diversifies both the stock specific risks
associated with early stage investing, and the liquidity risk. We
have demonstrated that we can make >20x returns and often
do which pays for the ones that are less successful, meaning
we still deliver strong returns.
Outlook
It is evident that technology is continuing to open up new
markets at a faster pace than ever and emerging companies
exploit that. So far it has been a boom in hardware
companies enabling AI. The next boom will be new
applications using AI. I continue to be excited. Alas I am less
confident that the Company can survive the shareholder
challenges on its own share register but we continue to strive
for a solution in one form or another.
KATIE POTTS
20 February 2026
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North Japan & Asia 2025 2024
UK EMEA America Pacific Total Total
CLASSIFICATION* % % % % % %
COMMUNICATIONS 4.6 0.9 0.7 1.2 7.4 12.4
Advertising & Marketing 1.2 – – 0.1 1.3 3.1
Entertainment Content 0.5 0.1 – – 0.6 0.5
Internet, Media & Services 1.3 0.2 0.3 1.0 2.8 4.7
Publishing & Broadcasting 0.8 0.3 – – 1.1 1.6
Telecommunications 0.8 0.3 0.4 0.1 1.6 2.5
CONSUMER DISCRETIONARY – – 0.8 0.2 1.0 0.4
Automotive – – – 0.1 0.1 –
E-Commerce Discretionary – – – 0.1 0.1 0.1
Wholesale – Discretionary – – 0.8 – 0.8 0.3
ENERGY 0.4 – 0.8 – 1.2 0.8
Oil & Gas Services & Equipment – – 0.2 – 0.2 0.2
Renewable Energy 0.4 – 0.6 – 1.0 0.6
FINANCIALS 0.6 – – 0.6 1.2 1.2
Asset Management 0.4 – – – 0.4 0.5
Speciality Finance 0.2 – – 0.6 0.8 0.7
HEALTH CARE 0.3 0.4 – 0.2 0.9 1.2
Biotechnology & Pharmaceutical 0.1 – – – 0.1 0.1
Health Care Facilities & Services – – – – – 0.2
Medical Equipment & Devices 0.2 0.4 – 0.2 0.8 0.9
INDUSTRIALS 4.6 0.5 3.5 1.1 9.7 10.1
Aerospace & Defence 0.6 – 0.5 0.1 1.2 2.0
Commercial Support Services 0.9 – 1.0 – 1.9 2.6
Electrical Equipment 1.3 0.5 1.9 0.9 4.6 3.4
Industrial Intermediate Production 1.8 – – 0.1 1.9 2.0
Transportation & Logistics – – 0.1 – 0.1 0.1
MATERIALS – – – 0.2 0.2 0.3
Chemicals – – – 0.2 0.2 0.2
Forestry, Paper & Wood Products – – – – – 0.1
TECHNOLOGY 10.8 9.0 32.7 9.3 61.8 65.6
IT Services 1.1 0.5 0.5 1.0 3.1 5.4
Semiconductors 0.2 3.6 6.0 2.9 12.7 10.1
Software 7.2 4.0 13.6 2.6 27.4 34.0
Technology Hardware 2.3 0.9 12.6 2.8 18.6 16.1
UTILITIES 0.8 – – – 0.8 1.3
Electricity & Gas Marketing & Trading 0.8 – – – 0.8 1.1
Gas & Water Utilities – – – – – 0.2
TOTAL EQUITIES (including convertibles and warrants) 22.1 10.8 38.5 12.8 84.2 –
Total equities – 2024 (including convertibles and warrants) 35.5 11.7 34.1 12.0 – 93.3
BONDS 1.5 1.2 2.3 1.2 6.2 4.9
NET LIQUID ASSETS** 2.8 2.3 1.3 3.2 9.6 1.8
TOTAL NET ASSETS 26.4 14.3 42.1 17.2 100.0 –
Total net assets – 2024 36.5 13.2 36.8 13.5 – 100.0
SHAREHOLDERS’ FUNDS 26.4 14.3 42.1 17.2 100.0 –
Shareholders’ Funds – 2024 36.5 13.2 36.8 13.5 – 100.0
Number of equity investments (including convertibles and warrants) 78 30 85 85 278 310
* Source: Bloomberg Industry Classification Standard.
** Cash, current assets and liabilities.
CLASSIFICATION OF INVESTMENTS
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TOP TWENTY EQUITY HOLDINGS AS AT 31 DECEMBER 2025
As a leader in design, manufacturing, hardware platform and supply chain solutions, Celestica partners
with leading companies in aerospace and defence, communications, enterprise, health technology,
industrial and capital equipment, to deliver solutions for their most complex challenges. Celestica
brings global expertise and insight at every stage of product development – from the drawing board to
full-scale production and after-market services. Celestica has employees across North America, Europe
and Asia, that help, develop and deliver a new products for their customers.
Fabrinet is a leading provider of advanced optical packaging and precision optical,
electro-mechanical and electronic manufacturing services to original equipment manufacturers of
complex products, such as optical communication components, modules and subsystems, industrial
lasers and sensors. Fabrinet offers a broad range of advanced optical and electro-mechanical
capabilities across the entire manufacturing process, including process design and engineering,
supply chain management, manufacturing, advanced packaging, integration, final assembly and test.
Fabrinet focuses on production of high complexity products in any mix and volume. Fabrinet
maintains engineering and manufacturing resources and facilities in Thailand, the United States and
the People’s Republic of China.
BE Semiconductor Industries (‘Besi’) is a leading supplier of semiconductor assembly equipment for
the global semiconductor and electronics industries offering high levels of accuracy, productivity and
reliability at a low cost of ownership. Besi develops leading edge assembly processes and equipment
for lead frame, substrate and wafer level packaging applications in a wide range of end-user markets
including electronics, mobile internet, computer, automotive, industrial, LED and solar energy.
Customers are primarily leading semiconductor manufacturers, assembly subcontractors and
electronics and industrial companies.
Founded in 1983, Pegasystems (‘Pega’) provides a platform that empowers the world’s leading
organisations to unlock business-transforming outcomes with real-time optimisation software.
Clients use Pega’s enterprise AI decisioning and workflow automation to solve pressing business
challenges – from personalising engagement to automating service to streamlining operations.
Pegahas built a scalable and flexible architecture to help enterprises meet customer demands while
continuously transforming for tomorrow.
Silicon Motion Technology (‘SMT’) is the global leader in supplying NAND flash memory controllers
for solid state storage devices. They supply more SSD controllers than any other company in the
world for servers, PCs and other client devices and are the leading merchant supplier of eMMC and
UFS embedded storage controllers used in smartphones, IoT devices and other applications. SMT also
supplies customised high-performance hyperscale data center and specialised industrial and
automotive SSD solutions. Customers include most of the NAND flash vendors, storage device
module makers and leading OEMs.
£46.1m
VALUATION
3.6%
OF TOTAL ASSETS
0.2%
OF ISSUED SHARE
CAPITAL HELD
£1.8m
BOOK COST
£32.1m
VALUATION
2.5%
OF TOTAL ASSETS
0.3%
OF ISSUED SHARE
CAPITAL HELD
£1.2m
BOOK COST
£28.0m
VALUATION
2.2%
OF TOTAL ASSETS
0.3%
OF ISSUED SHARE
CAPITAL HELD
£0.6m
BOOK COST
£26.7m
VALUATION
2.1%
OF TOTAL ASSETS
0.4%
OF ISSUED SHARE
CAPITAL HELD
£1.5m
BOOK COST
£24.5m
VALUATION
1.9%
OF TOTAL ASSETS
1.1%
OF ISSUED SHARE
CAPITAL HELD
£1.7m
BOOK COST
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Diploma is an international value-add distribution Group, organised across three sectors: Controls, Seals
and Life Sciences. Value-add services are delivered alongside products, which include: wire & cable,
connectors, fasteners and adhesives; seals, gaskets, hose and fluid power sealing products; surgical and
diagnostic equipment, consumables and instrumentation. An entrepreneurial culture and decentralised
management structure ensures that decisions are made close to the customer and that the businesses are
agile and responsive to changes in the market and the competitive environment. Diploma operates in
core geographies of North America, Continental Europe, UK and Australia.
Vicor Corporation designs, develops, manufactures and markets modular power components and
complete power systems based upon a portfolio of patented technologies. Vicor sells its products to the
power systems market, including enterprise and high performance computing, industrial equipment and
automation, telecommunications and network infrastructure, vehicles and transportation, aerospace and
defence.
Nordic Semiconductor is a Norwegian fabless semiconductor company specialising in wireless
communication technology that powers the Internet of Things (IoT). Nordic was established in 1983 and
has more than 1,500 employees across the globe. Nordic’s Bluetooth Low Energy solutions pioneered
ultra-low power wireless, making them the global market leader. The technology range was later
supplemented by ANT+, Thread and Zigbee and in 2018 they launched low power, compact
LTE-M/NB-IoT cellular IoT solutions to extend the penetration of the IoT. The Nordic portfolio was further
complemented by Wi-Fi technology in 2021. Nordic’s Bluetooth LE solutions are used by the world’s
leading brands in a variety of products, including wireless PC peripherals, gaming, sports and fitness,
mobile phone accessories, consumer electronics, toys, healthcare and automation.
Volex is a leader in integrated manufacturing for mission-critical applications, in particular for power and
data connectivity solutions. Volex supports international blue-chip customers in five key sectors: Electric
Vehicles, Consumer Electricals, Medical, Complex Industrial Technology and Off-Highway. Headquartered
in the UK, Volex has operations across 28 advanced manufacturing facilities, uniting 14,000 employees
from 25 different nations. Products find their way to market through localised sales teams and authorised
distributor partners, supporting Original Equipment Manufacturers and Electronic Manufacturing Services
companies across the globe. In a world that grows more digitally complex by the day, customers choose
Volex to deliver power and connectivity that drives everything from household essentials to life-saving
medical equipment.
Supermicro Micro Computer (‘Supermicro’) is a global leader in application-optimised IT solutions. Founded
and operating in San Jose, California, Supermicro delivers innovative enterprise, cloud, AI and 5G telco/edge
IT infrastructure hardware, it is a total IT Solutions provider with server, AI, storage, IoT, switch systems,
software and support services. Supermicro’s motherboard, power and chassis design expertise further
enables our development and production, enabling next generation innovation from cloud to edge for
global customers. Products are designed and manufactured in-house (in the US, Taiwan and the
Netherlands), leveraging global operations for scale and efficiency and optimised to improve TCO and
reduce environmental impact (Green Computing). The award-winning portfolio of solutions enables
customers to optimise for their exact workload and application by selecting from a broad family of systems
built from flexible and reusable building blocks that support a comprehensive set of form factors,
processors, memory, GPUs, storage, networking, power and cooling solutions (air-conditioned, free air
cooling or liquid cooling).
£23.8m
VALUATION
1.8%
OF TOTAL ASSETS
0.3%
OF ISSUED SHARE
CAPITAL HELD
£0.3m
BOOK COST
£19.9m
VALUATION
1.5%
OF TOTAL ASSETS
0.7%
OF ISSUED SHARE
CAPITAL HELD
£10.3m
BOOK COST
£15.6m
VALUATION
1.2%
OF TOTAL ASSETS
0.8%
OF ISSUED SHARE
CAPITAL HELD
£6.2m
BOOK COST
£15.1m
VALUATION
1.2%
OF TOTAL ASSETS
2.0%
OF ISSUED SHARE
CAPITAL HELD
£4.7m
BOOK COST
£14.2m
VALUATION
1.1%
OF TOTAL ASSETS
0.1%
OF ISSUED SHARE
CAPITAL HELD
£1.3m
BOOK COST
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TOP TWENTY EQUITY HOLDINGS AS AT 31 DECEMBER 2025
CONTINUED
BizLink was founded in 1996 in Silicon Valley and has grown into a global team of over 20,000
employees across 20 countries. Initial products were power-cord sets, today BizLink offers a full
range of wire harnesses, connectors and custom cable assemblies, whilst continuing to innovate in
adeveloping a range of interconnect technologies. With agile manufacturing and collaborative R&D
hubs across North America, Europe and Asia, BizLink combines global scale and local responsiveness.
Radware is a global leader of cyber security and application delivery solutions for physical, cloud and
software defined data centers. Its award-winning solutions portfolio secures the digital experience by
providing infrastructure, application and corporate IT protection and availability services to
enterprises globally. Radware’s solutions empower enterprise and carrier customers worldwide to
adapt to market challenges quickly, maintain business continuity and achieve maximum productivity
while keeping costs down.
Descartes Systems (‘Descartes’) offers networks, applications, global trade content and collaborative
multi-modal logistics communities to improve the productivity, performance. safety and security of
logistics and supply chain operations. Customers use Descartes modular, cloud-based and data
content solutions to route, schedule, track, train and measure delivery resources; plan, allocate and
execute shipments; rate, audit and pay transportation invoices; access and analyse global trade data;
research and perform trade tariff and duty calculations; file customs and security documents for
imports and exports; comply with trade regulations and complete numerous other logistics
processes. Customers can purchase Descartes’ solutions either on a subscription, transactional or
perpetual license basis. The company serves transportation providers (air, ocean and truck modes),
logistics service providers (including third-party logistics providers, freight forwarders, freight brokers
and customs brokers) and manufacturers, retailers, distributors and business service providers.
Descartes headquarters are in Waterloo, Ontario, Canada and they have offices and partners around
the world.
Arlo Technologies (‘Arlo’) offers advanced home, business and personal security solutions. Arlo’s deep
expertise in AI- and CV-powered analytics, cloud services, user experience and product design, and
innovative wireless and RF connectivity enables the delivery of a seamless, smart security experience
for Arlo users that is easy to set up and interact with. Arlo’s cloud-based platform provides users with
visibility, insight and a powerful means to help protect and connect in real-time with the people and
things that matter most, from any location with a Wi-Fi or a cellular connection. Arlo has recently
launched several categories of award-winning connected devices, software and services. These
include wire-free, smart Wi-Fi and LTE-enabled security cameras, video doorbells, floodlights,
security system and Arlo’s subscription service, Arlo Secure.
JFrog the creator of the unified DevOps, DevSecOps and MLOps platform, aims to create a world of
software delivered without friction from developer to production. The JFrog Software Supply Chain
Platform is a single system of record that powers organisations to build, manage and distribute
software quickly and securely, that is available, traceable and tamper-proof. Integrated security
features also help identify, protect and remediate against threats and vulnerabilities. JFrog’s hybrid,
universal, multi-cloud platform is available as both SaaS services across major cloud service providers
and self-hosted. Millions of users and over 7,000 customers worldwide, including a majority of the
Fortune 100, depend on JFrog solutions to securely embrace digital transformation.
£11.7m
VALUATION
0.9%
OF TOTAL ASSETS
1.1%
OF ISSUED SHARE
CAPITAL HELD
£6.2m
BOOK COST
£10.6m
VALUATION
0.8%
OF TOTAL ASSETS
0.2%
OF ISSUED SHARE
CAPITAL HELD
£4.5m
BOOK COST
£13.1m
VALUATION
1.0%
OF TOTAL ASSETS
0.2%
OF ISSUED SHARE
CAPITAL HELD
£2.7m
BOOK COST
£12.1m
VALUATION
0.9%
OF TOTAL ASSETS
1.6%
OF ISSUED SHARE
CAPITAL HELD
£5.1m
BOOK COST
£12.0m
VALUATION
0.9%
OF TOTAL ASSETS
0.2%
OF ISSUED SHARE
CAPITAL HELD
£0.4m
BOOK COST
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Founded in Denmark in 2007, Trustpilot has since grown to become one of the world’s leading
consumer review platforms. Trustpilot offers a public platform where consumers can leave reviews
for businesses and businesses can respond to honest feedback. The platform is open to all businesses
and consumers – yet independent of both – every interaction on Trustpilot is transparent for all to
see. Trustpilot business model is to charge recurring software fees to its corporate customers for the
use of the platform.
Varonis is a leader in data security, fighting a different battle than conventional cybersecurity
companies. The company’s cloud-native Data Security Platform continuously discovers and classifies
critical data, removes exposures and detects advanced threats with AI-powered automation.
Thousands of organisations worldwide trust Varonis to defend their data wherever it lives – across
SaaS, IaaS and hybrid cloud environments. Customers use Varonis to automate a wide range of
security outcomes, including data security posture management (DSPM), data classification, data
access governance (DAG), data detection and response (DDR), data loss prevention (DLP) and insider
risk management.
GB Group (’GBG’), was founded in 1989, originally pioneering new ways of delivering address
management services. Since then, the offering has grown to cover three core areas of Location,
Identity & Fraud, which together create confidence online. The location business ensures addresses
and locations can be easily captured, verified and managed. GBG’s digital identity verification tools
ensure that companies are trading with good customers and can identify the bad actors. Fraud
prevention solutions reduce financial risk and ensure compliance with regulations. GBG’s future goal
is to facilitate online environments where everyone can transact with the complete and
unconditional confidence they expect.
Telecom Plus, which owns and operates Utility Warehouse (UW), is the UK’s leading multiservice
utility provider, offering bundled household services – energy, broadband, mobile and insurance.
Customers benefit from the convenience of a single monthly bill, consistently good value across all
their utilities and exceptional service levels. Customers sign up through a network of local
UWPartners all across the country. These Partners recommend UW’s services to friends, family and
people they know by word-of-mouth.
Seeing Machines, a global company founded in 2000 and headquartered in Australia, is an industry
leader in vision-based monitoring technology that enable machines to see, understand and assist
people. Seeing Machines’ technology portfolio of AI algorithms, embedded processing and optics
power products that need to deliver reliable real-time understanding of vehicle operators. The
technology spans the critical measurement of where a driver is looking, through to classification of
their cognitive state as it applies to accident risk. Reliable “driver state” measurement is the end-goal
of driver monitoring systems (DMS) technology. Seeing Machines develops DMS technology to drive
safety for automotive, commercial fleet, off-road and aviation. The company has offices in Australia,
the U.S., Europe and Asia, and supplies technology solutions and services to industry leaders in each
market vertical.
£9.8m
VALUATION
0.8%
OF TOTAL ASSETS
3.7%
OF ISSUED SHARE
CAPITAL HELD
£7.4m
BOOK COST
£10.2m
VALUATION
0.8%
OF TOTAL ASSETS
0.4%
OF ISSUED SHARE
CAPITAL HELD
£5.2m
BOOK COST
£10.5m
VALUATION
0.8%
OF TOTAL ASSETS
1.6%
OF ISSUED SHARE
CAPITAL HELD
£6.8m
BOOK COST
£10.1m
VALUATION
0.8%
OF TOTAL ASSETS
1.7%
OF ISSUED SHARE
CAPITAL HELD
£4.5m
BOOK COST
£10.0m
VALUATION
0.8%
OF TOTAL ASSETS
0.9%
OF ISSUED SHARE
CAPITAL HELD
£5.0m
BOOK COST
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Herald Investment Trust plc
DETAILED LIST OF INVESTMENTS
AT 31 DECEMBER 2025
Ordinary or common shares unless otherwise stated.
Value
Classification Name £’000 %
UNITED KINGDOM
Advertising & Marketing l Ebiquity 384
l Next 15 5,738
S4 Capital 1,471
l System1 1,265
l The Mission Group 1,040
l Time Out 546
l YouGov 5,299
15,743 1.2
Entertainment Content l Zinc Media 3,929 0.3
Internet, Media & Services l Dianomi 77
Future 3,730
l Sysgroup 629
l Ten Lifestyle Group 1,832
Trustpilot 10,543
16,811 1.3
Publishing & Broadcasting l Audioboom 3,083
Bloomsbury Publishing 7,604
10,687 0.8
Telecommunications l Fonix 1,936
Gamma Communications 4,194
l GlobalData 2,735
l Maintel 1,045
9,910 0.8
Automotive l Quartix Technologies 554 0.0
Wholesale - Discretionary l Northamber 354 0.0
Renewable Energy l Invinity Energy Systems 2,462
l ITM Power 3,157
5,619 0.4
Asset Management l HIML Holdings 5,007 0.4
Speciality Finance l PCI-PAL 2,215 0.2
Biotechnology & Pharmaceutical l C4X Discovery 808 0.1
Health Care Facilities & Services l Feedback 134 0.0
Medical Equipment & Devices BATM Advanced Communications 2,531 0.2
Aerospace & Defence l Cohort 8,026 0.6
Commercial Support Services l Science Group 6,178
Wilmington 5,212
11,390 0.9
Electrical Equipment l Vianet 340
l Volex 15,085
XP Power 898
16,323 1.3
Industrial Intermediate Production Diploma 23,828 1.8
IT Services l Celebrus Technologies 3,347
l Cerillion 3,672
Kainos 2,802
l Netcall 3,337
l Team Internet 1,687
14,845 1.1
l denotes AIM stock
l denotes unquoted security
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Herald Investment Trust plc
Value
Classification Name £’000 %
UNITED KINGDOM continued
Semiconductors l CML Microsystems 3,126 0.2
Software l 1Spatial 2,607
l ActiveOps 6,747
Aptitude Software 7,203
l Bango 5,732
l Beeks Financial Cloud 1,265
l Boku 6,417
l BrandShield Systems 554
l Celoxica 4,870
l Checkit 1,876
l Corero Network Security 4,064
l Craneware 9,063
l Dillistone 141
l Dotdigital 2,281
GB Group 10,096
l GetBusy 1,124
l Idox 9,144
l Intercede 2,616
l itim 981
l KRM22 1,246
l Microlise 695
NCC 2,164
l Oxford Metrics 2,292
l Pulsar Group 3,704
l Spectra Systems 2,791
l ZOO Digital 920
90,593 7.0
Technology Hardware l Calnex Solutions 605
l Concurrent Technologies 1,889
discoverIE 3,789
l Filtronic 705
l Focusrite 1,201
l Gooch & Housego 2,086
l Ilika 2,376
l MTI Wireless Edge 1,958
l SDI 3,551
l Seeing Machines 9,796
27,956 2.3
Electricity & Gas Marketing & Trading Telecom Plus 10,049 0.8
TOTAL UNITED KINGDOM EQUITIES 280,438 21.7
EUROPE, MIDDLE EAST AND AFRICA (EMEA)
Entertainment Content Vivendi 1,024 0.1
Internet, Media & Services HBX Group 1,951
North Media 992
2,943 0.2
Publishing & Broadcasting Louis Hachette 3,407 0.3
Telecommunications Intred 3,269 0.3
Medical Equipment & Devices LUMIBIRD 5,657 0.4
Electrical Equipment Detection Technology 1,909
PFISTERER 4,989
6,898 0.5
l denotes AIM stock
l denotes unquoted security
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Herald Investment Trust plc
DETAILED LIST OF INVESTMENTS CONTINUED
AT 31 DECEMBER 2025
Value
Classification Name £’000 %
EUROPE, MIDDLE EAST AND AFRICA (EMEA) continued
IT Services B3 Consulting 1,363
Sword Group 4,682
6,045 0.5
Semiconductors Aixtron 2,629
BE Semiconductor Industries 27,955
Nordic Semiconductor 15,569
46,153 3.6
Software Atea 4,640
Enea 3,418
Exasol 1,811
Median Technologies 6,025
Nordhealth 4,769
Planisware 2,561
RaySearch Laboratories 7,349
Sidetrade 8,440
STREAMWIDE 1,270
Trifork 2,635
Upsales Technology 2,691
WALLIX 6,395
52,004 4.0
Technology Hardware Adtran 1,289
ATEME 1,953
Comet 3,161
Ekinops 1,683
NCAB 3,857
11,943 0.9
TOTAL EMEA EQUITIES 139,343 10.8
NORTH AMERICA
Internet, Media & Services HealthStream 3,420 0.3
Telecommunications Cogent Communications 3,199
Ooma 2,259
5,458 0.4
Wholesale - Discretionary Climb Global Solutions 5,719
ePlus 4,865
10,584 0.8
Oil & Gas Services & Equipment Pason Systems 2,911 0.2
Renewable Energy Electrovaya 8,407 0.6
Aerospace & Defence Leonardo DRS 7,206 0.5
Commercial Support Services CSG Systems 2,344
First Advantage 4,306
Forrester Research 902
FranklinCovey 2,176
Spire Global 2,141
11,869 1.0
Electrical Equipment Allient 1,588
Bel Fuse - Class A 840
Bel Fuse - Class B 3,769
Mesa Laboratories 2,905
M-tron Industries 2,638
nLIGHT 5,977
Novanta 3,089
Powell Industries 2,363
Tecogen 1,545
24,714 1.9
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Value
Classification Name £’000 %
NORTH AMERICA continued
Transportation & Logistics Freightos 846 0.1
IT Services CI&T 1,812
Coveo Solutions 1,431
Rimini Street 2,871
6,114 0.5
Semiconductors Arteris 4,593
CEVA 8,306
FormFactor 2,688
Intellicheck 4,813
Ouster 3,209
Power Integrations 3,954
QuickLogic 3,235
Silicon Laboratories 2,663
Silicon Motion Technology* 24,539
Tower Semiconductor 9,564
Valens Semiconductor 994
Veeco Instruments 4,236
Vishay Precision 5,428
78,222 6.0
Software Alkami Technology 8,561
AvePoint 8,759
Aware 590
Bandwidth 2,407
Braze 3,180
Commerce.com 2,134
D2L 6,198
Descartes Systems 12,028
Digi International 3,854
Digital Turbine 2,221
DigitalOcean 5,883
FalconStor Software 149
Five9 4,460
Genasys 1,111
JFrog 10,639
Kinaxis 5,143
Kneat 4,511
N-able 1,940
OneSpan 1,905
PDF Solutions 4,762
Pegasystems 26,658
Qualys 6,403
Radware 12,058
Real Matters 1,174
Red Violet 8,445
Similarweb 3,601
Simulations Plus 2,702
SPS Commerce 4,629
Tecsys 3,308
Varonis Systems 10,217
Vertex 2,963
Workiva 3,203
175,796 13.6
* American Depositary Receipts – certificates representing shares in the stock, issued by a US bank, denominated and paying dividends in US dollars
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Herald Investment Trust plc
DETAILED LIST OF INVESTMENTS CONTINUED
AT 31 DECEMBER 2025
Value
Classification Name £’000 %
NORTH AMERICA continued
Technology Hardware Arlo Technologies 11,728
Aviat Networks 2,458
Blackline Safety 8,393
Celestica 46,074
CTS 3,497
Everspin Technologies 5,484
Fabrinet 32,055
Harmonic 5,760
Kopin 3,284
RADCOM 3,127
Ribbon Communications 1,709
Silicom 1,339
Super Micro Computer 14,213
VIAVI Solutions 3,636
Vicor 19,919
162,676 12.6
TOTAL NORTH AMERICA EQUITIES 498,223 38.5
ASIA PACIFIC
Advertising & Marketing Pureprofile 690 0.1
Internet, Media & Services ADDCN Technology 401
Bengo4.com 5,663
Gabia 1,215
giftee 1,070
GMO Internet 2,226
Praemium 2,454
RMA Global 412
13,441 1.0
Telecommunications Kinx 1,373 0.1
Automotive Musashi Seimitsu Industry 785 0.1
E-Commerce Discretionary Momo.com 795 0.1
Speciality Finance EML Payments 321
Green World FinTech Service 623
Infomart 3,677
Net Protections 623
Plaid 2,443
7,687 0.6
Medical Equipment & Devices Artrya 1,334
Compumedics 1,241
JEOL 356
2,931 0.2
Aerospace & Defence Electro Optic Systems 1,059 0.1
Commercial Support Services Freelancer 530 0.0
Electrical Equipment Catapult Sports 9,273
Chroma ATE 1,062
FOCI Fibre Optic Communications 1,199
Voltronic Power Technology 572
12,106 0.9
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Herald Investment Trust plc
Value
Classification Name £’000 %
ASIA PACIFIC continued
Industrial Intermediate Production Elite Material 1,903 0.1
Chemicals Soulbrain 2,532 0.2
IT Services Chief Telecom 1,107
Cyber Security Cloud 1,337
Cybertrust Japan 1,541
ExaWizards 1,725
RAKUS 1,336
Senetas 1,255
WingArc1st 4,179
12,480 1.0
Semiconductors Andes Technology 397
AP Memory Technology 2,641
ASMPT 1,654
eMemory Technology 2,030
Eugene Technology 1,661
Himax Technologies* 2,430
Innodisk 816
ISC 1,396
Kulicke & Soffa Industries 8,442
MPI 691
Phison Electronics 853
PSK 2,489
Realtek Semiconductor 6,286
Santec 1,424
Tokyo Seimitsu 1,351
WinWay Technology 1,138
Wonik IPS 1,327
37,026 2.9
Software Acer Cyber Security 1,113
Beamtree 570
Chanjet Information Technology** 1,415
CRESCO 990
Fasoo 1,671
Freee K.K. 441
Genians 1,091
GMO GlobalSign 666
HENNGE K.K. 1,428
Kinatico 2,848
Money Forward 5,638
OBIC Business Consultants 2,241
ORO 842
PKSHA Technology 830
Plus Alpha Consulting 3,062
Property Data Bank 907
Sansan 1,952
SpiderPlus 221
TDC SOFT 475
TeamSpirit 1,134
TerraSky 2,294
Xref 1,027
Zuken 1,122
33,978 2.6
* American Depositary Receipts – certificates representing shares in the stock, issued by a US bank, denominated and paying dividends in US dollars
** H Shares – issued by companies incorporated in the People’s Republic of China and listed on the Hong Kong Stock Exchange
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INVESTMENT REPORT
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Annual report & financial statements 2025
Herald Investment Trust plc
DETAILED LIST OF INVESTMENTS CONTINUED
AT 31 DECEMBER 2025
Value
Classification Name £’000 %
ASIA PACIFIC continued
Technology Hardware Advantech 857
BizLink 13,099
Chicony Electronics 3,097
E Ink 3,152
Kinsus Interconnect Technology 1,727
Parade Technologies 1,032
Park Systems 430
RFHIC 1,681
Suprema 1,446
Taiwan Union Technology 933
Tripod Technology 8,059
35,513 2.8
TOTAL ASIA PACIFIC EQUITIES 164,829 12.8
LOAN STOCKS HAVING AN
ELEMENT OF EQUITY RISK
l Pulsar Group - 7.25% Loan 31 Jul 2026 3,000
l Zinc Media - 8% Loan 31 Dec 2027 958
l Zinc Media - Libor+4 Rate Bank Loan 31 Dec 2027 1,052
l Zinc Media - Variable Rate Loan 31 Dec 2027 377
TOTAL LOAN STOCKS HAVING AN ELEMENT OF EQUITY RISK 5,387 0.4
Total Equity Investments 1,088,220 84.2
Fixed Interest Norwegian Government Bond - 1.5% 19 Feb 2026 15,795
Singapore Government Savings Bond - 1.25% 01 Nov 2026 14,971
UK Government Bond - 1.50% 22 Jul 2026 19,772
US Treasury Stock - 3.75% 15 Apr 2026 29,689
TOTAL FIXED INTEREST 80,227 6.2
Total Investments 1,168,447 90.4
Net Liquid Assets+ 123,966 9.6
Total Assets At Market Value 1,292,413 100.0
l denotes unquoted security
+ Cash, current assets and liabilities
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Herald Investment Trust plc
LONG-TERM PERFORMANCE
Continued
steady growth
The Company, founded in 1994 by Katie Potts, raised an initial £65m to invest in the UK and continental European technology
and communications sector. Warrants were issued to initial investors on a 1 for 5 basis. In 1996, a further £30m was raised to
globalise the fund, thus bringing the total outside capital to £95m. Since 1996, no new capital has been raised, and the
warrants have been repurchased or converted into ordinary shares.
The Company has operated an opportunistic buyback policy, which has helped create value for shareholders. Since inception,
the Company has completed buybacks to the value of £530m which significantly exceeds the outside capital raised by the
Company. Over the history of the fund, net asset value per share on a total return basis has grown by 2,847.8% or 11.2% on an
annualised basis.
TOTAL RETURN SINCE
INCEPTION
2,847.8%
ANNUALISED TOTAL RETURN
SINCE INCEPTION
11.2%
CAPITAL SINCE INCEPTION
Number of Diluted net
Shareholders’ shares in asset value (Discount)/
At Total assets Bank loans funds issue per share*
A
Share price premium
A
31 December £’000 £’000 £’000 ’000 p p %
≠ Inception 64,107 – 64,107 65,000 98.70 90.90◊ (7.9)*
1994 60,823 – 60,823 65,000 93.57 94.60 1.1
±1995 89,689 – 89,689 65,000 132.36§ 127.00 (4.0)
1996 130,055 – 130,055 82,894 150.88§ 136.00 (9.9)
1997 147,424 – 147,424 82,896 171.80 136.15 (20.8)
1998 170,982 – 170,982 82,901 201.70 161.50 (19.9)
1999 432,620 (3,343) 429,277 82,961 494.22 511.10
3.4
2000 378,607 (3,233) 375,374 83,874 431.43 491.00 13.8
2001 275,624 (2,892) 272,732 84,454 314.53 306.00 (2.7)
2002 199,900 (22,310) 177,590 84,475 206.68 177.00 (14.4)
2003 350,209 (29,325) 320,884 87,807 365.44 325.25 (11.0)
#2004 356,874 (24,663) 332,211 87,556 379.43 322.75 (14.9)
2005 358,293 – 358,293 87,556 409.22 379.75 (7.2)
2006 401,228 (20,000) 381,228 86,556 435.41 383.50 (11.9)
2007 343,497 – 343,497 86,971
394.96 312.00 (21.0)
2008 275,789 (65,079)‡ 210,710 83,408 252.63 184.00 (27.2)
2009 397,194 (56,298)‡ 340,896 81,053 420.58 337.75 (19.7)
2010 533,499 (58,937)‡ 474,562 79,913 593.85 483.00 (18.7)
2011 519,656 (70,357)‡ 449,299 79,698 563.75 455.00 (19.3)
2012 572,243 (70,297)‡ 501,946 79,323 632.78 513.00 (18.9)
2013 662,538 (38,935)‡ 623,603 77,680 802.79 685.00 (14.7)
2014 667,450 (38,534)‡ 628,917 77,340 813.19 659.00 (19.0)
2015 709,139 (38,002)‡ 671,137 76,112 881.78 745.25 (15.5)
2016 816,414 (25,000) 791,414 73,062 1,083.21 882.50 (18.5)
2017 966,650 – 966,650 70,308 1,374.88 1,171.00 (14.8)
2018 901,154 – 901,154 68,902 1,307.89 1,075.00 (17.8)
2019 1,122,849 – 1,122,849 67,312 1,668.13 1,480.00 (11.3)
2020 1,503,367 – 1,503,367 65,783 2,285.33 2,245.00 (1.8)
2021 1,760,877 – 1,760,877 64,754 2,719.33 2,505.00 (7.9)
2022 1,305,048 – 1,305,048 62,173 2,099.05 1,782.00
(15.1)
2023 1,245,757 – 1,245,757 56,135 2,219.23 1,922.00 (13.4)
2024 1,252,602 – 1,252,602 50,341 2,488.24 2,430.00 (2.3)
2025 1,292,413 – 1,292,413 47,858 2,700.49 2,405.00 (10.9)
* The diluted net asset value per ordinary share figures have been calculated in accordance with
FRS102 (2015-2018), FRS22 (2008-2014), FRS14 (1995-2007).
A Alternative Performance Measure – see pages 82 and 83.
≠ Inception date 16 February 1994, 100p was shareholders’ subscription price before launch costs of
1.3p.
◊ 90.9p is the capital gains tax (CGT) base subscription price for shareholders adjusting for warrants
which were issued on a 1 for 5 basis. The CGT base for the warrant is 45.5p.
± Restated for change in accounting policy to account for income on an ex-dividend basis.
§ The diluted net asset values at 31 December 1995 and 1996 have been restated with the adoption of
FRS 14. The previously reported fully diluted net asset values were 131.65p and 149.45p respectively.
# The figures prior to 2004 have not been restated for the changes in accounting policies implemented
in 2005.
‡ Includes derivative financial instruments.
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30
Herald Investment Trust plc
Annual report & financial statements 2025
60
80
100
120
140
160
202520242023202220212020
FIVE YEAR RETURNS (CAPITAL ONLY)
(FIGURES HAVE BEEN REBASED TO 100 AT 31 DECEMBER 2020)
Source: LSEG Data & Analytics.
Fully diluted NAV
Share price
Deutsche Numis Smaller Companies
plus AIM (ex. investment companies)
Index
Russell 2000® Technology Index
(small cap) (in sterling terms)
LONG-TERM PERFORMANCE CONTINUED
REVENUE
Available Earnings Dividend
for ordinary per ordinary per ordinary Ongoing Net
At Income shareholders share net
¶
share net charges gearing/ Gross
31 December £’000 £’000 p p % cash
A
gearing
A
2015 9,136 (36) (0.05) – 1.08 95 106
2016 9,541 430 0.58 – 1.09 92 103
2017 10,799 486 0.68 – 1.08 93 100
2018 11,250 58 0.08 – 1.07 87 100
2019 11,735 31 6.79 – 1.09 88 100
2020 9,361 (3,997) (6.00) – 1.08 92 100
2021 12,253 (5,417) (8.33) – 1.02
93 100
2022 15,326 135 0.21 – 1.05 88 100
2023 17,926 4,026 6.79 – 1.07 92 100
2024 17,169 2,668 4.96 – 1.08 93 100
2025 15,629 346 0.70 – 1.08 84 100
¶ The calculation of earnings per ordinary share is based on the revenue from ordinary activities after
taxation and the weighted average number of ordinary shares in issue (see note 8).
A Alternative Performance Measure – see pages 82 and 83.
CUMULATIVE PERFORMANCE (TAKING 2015 AS 100) (CAPITAL ONLY)
Deutsche Numis
Diluted Smaller Companies Russell
net asset Share plus AIM 2000® Retail
At value price (ex. investment Technology price
31 December per share p companies) Index Index index
2015 100 100 100 100 100
2016 123 118 109 150 102
2017 156 157 130 161 107
2018 148 144 106 169 110
2019 189 199 126 218 112
2020 259 301 130 301 113
2021 308 336 154 347 122
2022 238 239 117 248 138
2023 252 258 117 299 145
2024 282
326 119 376 150
2025 306 323 129 375 157
COMPOUND ANNUAL RETURNS (CAPITAL ONLY)
Deutsche Numis
Diluted Smaller Companies Russell
net asset Share plus AIM 2000® Retail
At value price (ex. investment Technology price
31 December per share p companies) Index Index index
5 year 3.4% 1.4% –0.2% 4.5% 6.8%
10 year 11.8% 12.4% 2.6% 14.1% 4.6%
Past performance is not a reliable indicator to future performance.
NET LIQUID ASSETS AND FIXED
INTEREST AS PERCENT OF NAV
31DECEMBER 2025
15.8%
5 YEAR COMPOUND ANNUAL
GROWTH IN NAV PER SHARE
3.4%
10 YEAR COMPOUND ANNUAL
GROWTH IN NAV PER SHARE
11.8%
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0
500
1,000
1,500
2,000
2,500
3,000
20252023
2021 2019 2017201520132011200920072005200320011999199719951994
-30
-20
-10
0
10
20
20252023202120192017201520132011200920072005200320011999199719951994
PREMIUM/(DISCOUNT) TO FULLY DILUTED NET ASSET VALUE
(PLOTTED ON A MONTHLY BASIS)
Source: LSEG Data & Analytics.
CAPITAL RETURN SINCE INCEPTION
Inception
31 December 16 February
2025 1994 % change
Net asset value per ordinary share (including
current year income
A
2,700.49p 98.70p 2,636.06
Net asset value per ordinary share (excluding
current year income)
A
2,699.77p 98.70p 2,635.33
Share price 2,405.00p 90.90p 2,545.76
Deutsche Numis Smaller Companies
plus AIM (ex. investment companies) Index 5,963.52 1,750.00 240.77
Russell 2000® Technology Index (small cap)
(in sterling terms)
†
5,758.19 688.70* 736.10
A Alternative Performance Measure (APM). See Glossary of Terms and Alternative Performance Measures
on pages 82 and 83 of the financial report for details of the explanation and reconciliations of APMs.
* At 9 April 1996 being the date funds were first available for international investment.
† The Russell 2000® Technology Index (small cap) (in sterling terms) was rebased during 2009 following
some minor adjustments to its constituents. The rebased index is used from 31 December 2008
onwards.
DISCOUNT TO NAV
31 DECEMBER 2025
10.9%
CAPITAL RETURNS SINCE INCEPTION
(FIGURES HAVE BEEN REBASED TO 100 AT 16 FEBRUARY 1994)
Source: LSEG Data & Analytics.
Fully diluted NAV
Share price
Deutsche Numis Smaller Companies
plus AIM (ex. investment companies)
Index
Russell 2000® Technology Index
(small cap) (in sterling terms)
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Governance
34 Strategic Report
43 Your Board of Directors
44 Corporate Governance Report
48 Audit Committee Report
50 Directors’ Report
52 Directors’ Remuneration Report
55 Statement of Directors’ Responsibilities
56 Independent Auditors’ Report
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STATUS
The Company is an investment company within the meaning
of s833 of the Companies Act 2006 and operates as an
investment trust in accordance with s1158 of the Corporation
Tax Act 2010 as amended (“s1158”). The Company is
governed by its articles of association, amendments to which
must be approved by shareholders by way of a special
resolution, and is subject to the UK Listing Rules of the FCA.
The Company obtained approval from HM Revenue and
Customs of its status as an investment trust under s1158 and
the directors are of the opinion that the Company has and
continues to conduct its affairs in compliance with s1158
since this approval was granted.
BUSINESS MODEL
The Company has appointed Herald Investment
Management Limited (“HIML”) as the Alternative Investment
Fund Manager to provide all portfolio management and risk
management services. HIML is authorised and regulated by
the FCA both for investment management and as an
Alternative Investment Fund Manager (see the Directors’
Report, page 51).
Administration of the Company and its investments has been
delegated by HIML to the Bank of New York Mellon
(International) Limited (“BNYMIL”). BNYMIL is also the
depositary under a tripartite agreement between HIML, the
Company and BNYMIL, and is responsible for custody
activities. The company secretary is NSM Funds (UK) Limited
(“NSM”).
OBJECTIVE
The Company’s objective is described on the inside front
cover of this document.
INVESTMENT POLICY – STRATEGY
While the policy is global investment in smaller quoted
companies in technology and communications, the
approach is to construct a diversified portfolio through the
identification of individual companies which offer long-term
growth potential, typically over a five-year horizon or more.
The portfolio is actively managed and does not seek to track
any comparative index. With a remit to invest in smaller
companies with market capitalisation generally below $5bn
at the point of purchase, there tends to be a correlation with
the performance of smaller companies, as well as that of the
technology and communications sectors. A degree of
volatility relative to the overall market should be expected.
The risk associated with the illiquidity of smaller companies is
reduced by generally restricting the stake in any one
company to less than 10% of the shares in issue.
A number of investments are in early-stage companies,
which have a higher stock specific risk but the potential for
above average growth. Stock specific risk is reduced by
having a diversified portfolio.
In addition, to contain the risk of any one holding, the
Manager generally takes profits when a holding reaches
more than 5% of the portfolio. The Manager actively
manages the exposure within the constraint that illiquid
positions cannot be traded for short-term movements.
The Company has a policy not to invest more than 15% of
gross assets in other UK-listed investment companies. From
time to time, fixed interest holdings, non -equity or unquoted
investments may be held on an opportunistic basis.
The Company recognises the long-term advantages of
gearing and has a maximum gearing limit of 50% of net
assets. Borrowings are invested primarily in equity markets
but the Manager is permitted to invest in other securities in
the companies in the target areas when it is considered that
the investment grounds merit the Company taking a geared
position. The board’s intention is to gear the portfolio when
appropriate, taking into account current and future cashflow
requirements of the Manager. Gearing levels are monitored
closely by the Manager and reviewed by directors at each
board meeting.
The Company may use derivatives which will be principally,
but not exclusively, for the purpose of efficient portfolio
management (i.e. for the purpose of reducing, transferring or
eliminating investment risk in its investments, including
protection against currency risk).
A detailed analysis of the Company’s investment portfolio is
set out on pages 22 to 28 and in the Investment Manager’s
Report.
KEY PERFORMANCE INDICATORS (“KPIS”)
At each board meeting, the directors consider a number of
performance measures to assess the Company’s success in
achieving its objectives.
The KPIs used to measure the progress and performance of
the Company over time are established industry measures
and are as follows:
— the movement in net asset value per ordinary share
compared to the comparative indices;
— the movement in the share price;
— the discount; and
— the ongoing charges.
A historical record of these measures is shown on pages 29
to31.
The Company makes reference in this annual report and
financial statements to a number of alternative performance
measures, as described on pages 82 and 83.
SHARE CAPITAL
At 31 December 2025 the Company’s capital structure
consisted of 47,858,467 ordinary shares of 25p each (2024 –
50,340,861 ordinary shares). During the year 2,482,394 (2024
– 5,793,809) ordinary shares were bought back and
cancelled. There are no restrictions concerning the holding
or transfer of the Company’
s ordinary shares and there are
no special rights attached to any of the shares. On a winding
up, after meeting the liabilities of the Company, the surplus
assets would be paid to ordinary shareholders in proportion
to their shareholdings. Since year end and up to 20 February
2026, no shares have been bought back for cancellation.
DERIVATIVE INSTRUMENTS
The Company does not currently have any exposure to
derivative instruments (2024 – nil).
BORROWINGS
The Company is not currently geared and does not have any
form of credit facility but holds significant cash. The
requirement for a credit facility is kept under regular review,
taking into account the levels of cash held by the Company,
and cost, general market conditions and the Manager’s view
of its potential use of any such facility.
STRATEGIC REPORT
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REVIEW OF THE YEAR AND FUTURE DEVELOPMENTS
A review of the year and the investment outlook is contained
in the Chairman’s Statement and the Manager’s Report on
pages 8 to 16.
DIVIDENDS
The ordinary shares carry a right to receive dividends. Interim
dividends are determined by the directors and final dividends
are subject to shareholder approval.
The revenue reserve at the year end is a deficit of £981,000
(2024 – deficit £1,327,000). The board intends to pay afinal
dividend when there is revenue reserve available for
distribution and to ensure that the investment trust status of
the Company is maintained, For the latter, the Corporation
Taxes Act requires that 85% of income be distributed in
respect of the accounting period (the ‘income distribution
test’).
For the year ended 31 December 2025, although the
Company has distributable reserves, no dividend is required
given the income distribution test for the year has been met.
Accordingly, the directors do not recommend adividend for
the year under review. In making this decision, the board
considered the capital nature of returns from investee
companies which is reflected in the infrequency of dividends
being paid to shareholders, the last one being for the year
ended 31 December 2012.
PRINCIPAL RISKS AND UNCERTAINTIES
The audit committee, on behalf of the board, regularly
undertakes a robust assessment of the principal, including
emerging, risks facing the Company. These include those
that would threaten its business model, future performance,
solvency or liquidity (see Corporate Governance Report on
pages 44 to 47 and the Audit Committee Report on pages48
and49). Principal risks are also considered as part of the
board’s annual strategy meeting. The principal risks that
follow are those identified by the board after taking account
of mitigating factors.
All risks are documented on a risk register and are grouped
into six main categories: strategic risk; market, economic and
geopolitical risk; investment management risk; operational
risk; emerging/external risk; and regulatory risk. Risks are
rated by impact and likelihood of occurrence, with the
ratings charted on two risk matrices: a pre-mitigation and
apost-mitigation one. Mitigation takes into account
processes, procedures and internal controls, and the
post-mitigation matrix is used to identify the Company’s
principal risks. The risk register is reviewed on an ongoing
basis, in an attempt to capture all risks and ensure
appropriate mitigation is in place, and to enable directors to
concentrate on principal risks whilst ensuring all risks are
considered. Emerging risks are considered by the board as
they come into view and are incorporated into the existing
review of the Company’s risk register.
As part of the risk review, the board considered the
challenging global economic and geopolitical environment
including, but not limited to: the continuing effects of tariffs,
armed conflicts, climate change (covering adverse impacts,
transition and retrenchment of climate policies globally),
inflation and interest rates. Closer to the home front, the
board considered the challenges to the UK stock market in
particular, in conjunction with the wider challenge to
investment in the small and mid-cap end of the technology
market, and the existential risk to the Company given the
non-alignment of shareholders’ objectives with each other
and the disproportionate challenge to the Company’s
long-term investment basis caused by the Company’s
significant minority shareholder.
The top risks identified by this process (which correlate to the
principal risks of the Company) are set out below.
Risk trend from previous year: Û Risk level unchanged
Ú Less risk
Ò Heightened risk
Strategic Risk
Û
Company risk as an investor in smaller companies Û
There is a risk that public markets become unattractive to
investee companies due to a number of factors including
burdensome regulations and taxation, and this could result in
a smaller investible universe and orphan portfolio stocks. The
board and the Manager engage with external bodies in the
UK to endeavour to influence government and regulatory
policy to support quoted smaller companies. The portfolio is
globally diversified and the Manager has the ability to move
capital to more favourable markets.
The Company’s objective and strategy are not attractive
to investors
Ò
This risk rating has heightened from the already heightened
rating of the prior year, principally because there is the risk
that even though the Company’s objective and strategy
continue to be attractive to long-term investors, the short
term agenda of one or a relatively low number of
shareholders could cause significant damage to the
Company’s ability to continue to meet the Company’s, and
long-term shareholders’, objectives. This was demonstrated
by the requisition by Saba in January 2025 proposing the
removal of existing Directors and the appointment of
directors of its choice. The Chairman’s Statement sets out
how the board – following lengthy discussions with major
shareholders including Saba and in agreement with the
Manager – have attempted to address the situation,
beginning with the proposed Tender Offer announcement on
9 January 2026. Further details can also be found in the
circular sent to shareholders on 12 January 2026, a copy of
which is available at www.heralduk.com. Subsequent events
are set out in the Short Summary of Recent Events which
immediately follows the Chairman’s Statement.
A failure to adapt to changes in the market and investor
demand could leave the Company exposed to the risk of
shareholder dissatisfaction, activism and influence. There is
arisk to shareholders that they will not be able to sell their
shares at a price close to the underlying NAV. Over the
course of the Company’s history, the shares have generally
traded at a discount to underlying NAV and this discount
changes with market conditions. The board regularly reviews
the performance of the Company against relevant indices
and peers and annually reviews the Company’s investment
management arrangements. The Company has in place an
active buyback policy, which is monitored by the board,
whereby the Manager has authority to arrange buybacks of
shares within the limits approved at the AGM each year. The
board, the broker and the Manager engage regularly with
shareholders to understand their views on key topics
including discount volatility and shareholder views are
discussed at each board and strategy meetings. The board
regularly monitors the market for changes in sentiment. The
Company has a significant minority shareholder. A significant
minority shareholder’s vote could disproportionately affect
the outcome of any vote if shareholder voting numbers were
to be low. The board will seek to ensure all shareholders,
including those whose shares are held indirectly on
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Annual report & financial statements 2025
platforms, are informed of the upcoming AGM and of their
opportunity to vote.
Shareholders can raise questions of the board and the
Manager at the AGM. Shareholders are given the opportunity
to vote on the Company’s continuation every three years at
the AGM, with the next vote to be held at the AGM in 2028.
Market, Economic and Geopolitical Risks
Û
Market risk including but not limited to liquidity, price,
valuation, technology and communications, small cap risks
Û
This risk is considered unchanged, however, it remains high.
The Company’s assets consist mainly of listed securities and
the success of the Company’s business model is therefore
market-related and bears market risk (comprising currency
risk, interest rate risk and other price risk), liquidity risk and
credit risk. An explanation of those risks, which have been
subject to robust assessment by the directors, and how they
are managed is contained in note 17 to the financial
statements, and a description of the internal controls
operated by the Company is on pages 46 and 47. As
aspecialist investor in technology and communications and
small cap stocks, the Company is exposed to more volatile
share price movements than those of the general market
and, on occasion, it may be difficult for the Manager to
achieve sales of investments at market prices. The board’s
assessment of risk remained unchanged from the previous
year due to the continuing uncertainty and volatility in the
markets.
Economic risk Û
Interest rates, exchange rates, inflation, recession, taxes and
changes in supply and demand can all pose a threat to the
future of portfolio companies. The risk rating is unchanged
from last year, reflecting the continuing impact of higher for
longer interest rates and costs and the continuing
challenging economies.
Geopolitical risk Û
Political developments can create risks to the value of the
Company’s assets. For example, armed conflicts can affect
pricing and supply chains; uncertainty arising from global
trade tariffs; antitrust action in the US undermines
technology valuations and ongoing changes in UK
Government policy on Net Zero continues to create
uncertainty for UK businesses.
The Manager considers the above three risks on an ongoing
basis and reports on a regular basis to the board, including
reporting on the composition and diversification of the
portfolio by geography, sector and capitalisation along with
sales and purchases of investments. Individual investments
are discussed with the Manager together with the investment
team’
s general views on the various investment markets and
sectors. The board recognises that the potential for mitigation
is likely to be limited other than through diversification. The
risk rating remains consistent with last year, being at
aheightened level from that of more ‘normal’ times.
Investment Management Risk
Û
Liquidity risk Û
There is a risk that the Manager is unable to realise profits on
significant positions in the portfolio and to redeploy them in
sufficient sizes to new positions. Smaller companies have, by
their nature, limited liquidity and the Company may also
invest in unquoted securities which generally have greater
valuation uncertainties and liquidity risks than securities listed
or traded on a regulated market. The board receives regular
reports from the Manager, which is experienced in stock
selection. Investment risk is spread by having a diversified
portfolio. The holding in any one company is generally
restricted to less than 10% of the portfolio company’s shares
in issue and the Manager would usually start taking profits
when a holding reaches 5% of the portfolio. The risk rating
remains consistent with last year to reflect the deteriorating
liquidity in certain markets for some stocks, albeit the
Company’s closed end nature reduces the risk of a forced
disposal of illiquid investments.
Key person dependency Ò
There is a risk the lead investment manager (Katie Potts) or
other key members of the team become incapacitated or
otherwise unavailable. The loss of key members of the team
or key personnel changes in a short space of time could
destabilise the investment team, however, the investment
management team collaborate collectively and this ensures
there is appropriate coverage of all geographic areas and
sectors with back up where required easily available. The risk
has been increased due to the theoretical possibility of team
changes arising from the uncertainty that the Company is
exposed to given the diversity of shareholders’ requirements,
rather than any factual or anticipated changes.
Third Party Service Provider Operational Risk
Û
Information (including cyber) security and physical
security
Û
The failure or breach of information security could
potentially lead to breaches of confidentiality, data records
being compromised and the inability to make investment
decisions. The failure or breach of physical security could
lead to damage or loss of equipment, with consequential
negative results. Cyber security risks are considered and
continually monitored by the Manager as these threats
evolve and become increasingly sophisticated. This includes
advances in technology that has seen a greater use of
Artificial Intelligence. The integrity of the Company’s
information security is closely monitored by the board, with
each of the key service providers providing a regular report
through its internal audit function which covers information
technology security and provides comfort to the board that
appropriate safeguards are in place. All physical locations
have security in place and all third-party service providers
have disaster recovery plans.
Emerging/External Risk
Û
Emerging risk is a failure to have in place procedures that
assist in identifying new or familiar risks that become
apparent in new or unfamiliar conditions. The audit
committee reviews risk management and internal controls
twice a year and the board regularly considers industry
trends and forthcoming legislation/regulatory change with its
advisors, including the Manager, the broker and company
secretary. It also reviews regular updates from the
Association of Investment Companies (“AIC”) and the auditor
on such matters.
OTHER RISKS
The following are risks identified by the audit committee as
potentially having a major impact on the Company but, after
mitigation, are not deemed to be principal risks. All risk
ratings remained unchanged from the previous year.
Strategic Risk
Discount and discount volatility
Û
There is a risk that the discount at which the Company’s
shares trade may widen. The board monitors the level of
discount and its volatility and has undertaken significant
share buy backs over the life of the Company, including
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buying back 4.9% of the issued share capital in 2025 and
10.3% in 2024, measured to the start of each year.
Operational Risk Û
Disruption to or failure of the Manager’s or administrator’s
accounting systems or those of other third-party service
providers could lead to an inability to provide accurate
reporting and monitoring or a misappropriation of assets.
The Company uses third-party service providers and,
consequently, is exposed to operational risk including
information security and physical security, as described
earlier. The Manager, administrator and company secretary
each have comprehensive business continuity plans which
facilitate continued operation of the business in the event of
a service disruption or a major disruption event. The audit
committee receives the administrator’s report on internal
controls and the reports by other key third party pr
oviders are
reviewed by the Manager and company secretary on behalf
of the audit committee. The depositary reports six monthly
on custody matters, including the continued safe custody of
the Company’s assets.
Emerging/External Risk
Climate change risk Û
The financial risks from climate change are typically classified
as physical or transitional risks. Physical risks are those arising
from specific weather events (such as wildfires) and
transitional risks are those arising from the changes to
regulations (such as the move to net zer
o carbon). The
portfolio is well diversified to mitigate against physical risks.
Changes in climate change focused regulation, governing
both the Company and investee companies, will create some
uncertainty. A number of investments address the challenges
arising from climate change and may benefit. However, if
climate change has a significant adverse impact on the wider
economy, the Company could be negatively affected. In
comparison to the broader economy, the portfolio has
arelatively low carbon footprint. The board encourages the
Manager to consider environmental, social and governance
factors when selecting and retaining investments.
Global pandemic risk Û
A pandemic remains an ongoing risk with both primary and
consequential negative effects. The board continues to
monitor, together with the Manager, the market and
operational risks associated with pandemic risk and the
ongoing economic impact on the underlying investee
companies. The board is satisfied that the Manager and the
key service providers have in place robust plans and
infrastructure to minimise the impact on the Company’s
operations so that it can continue to trade, meet its
regulatory obligations, and report and meet shareholder
requirements. By their nature the risks presented by possible
future pandemics are exceptionally difficult to assess.
Regulatory Risk
Û
The failure to comply with applicable legal and regulatory
requirements could lead to a suspension of the Company’s
Stock Exchange listing, financial penalties by the FCA or
aqualified audit report. Breach of s1158 could lead to the
Company being subject to tax on capital gains. The Manager,
depositary and administrator provide regular reports to the
audit committee on their monitoring programmes. The
Manager monitors investment positions and the Manager and
administrator monitor the level of forecast income and
expenditure. Major regulatory change could impose
disproportionate compliance burdens on the Company.
Insuch circumstances, representations would be made to
seek to ensure that the special circumstances of investment
trusts are recognised.
THE BOARD AND DIVERSITY
Information concerning the board’s diversity is set out on
pages 44 and 45, including the board’s diversity policy.
BOARD’S DUTY TO PROMOTE THE SUCCESS OF THE
COMPANY (SECTION 172 STATEMENT)
The directors have a statutory duty to promote the success
of the Company for the benefit of shareholders, whilst having
regard to all stakeholders. They are also required to report
annually how they have had regard to such matters,
including identification of, and engagement with, key
stakeholders and how this has impacted their decision
making.
As an externally managed investment company with no
employees, the directors consider the Company’s main
stakeholders to be: its shareholders; the Manager; a small
number of other key service providers; investee companies in
the portfolio; the environment; and the wider economy.
Inthis context, the directors are not responsible for setting
a“business culture” in the usual sense, but they do meet
regularly with representatives of the Manager and the
company secretary and seek to understand the culture of
those businesses, and those of the Company’s key service
providers, and would raise any concerns in this regard if
necessary.
SHAREHOLDERS
Shareholder support is critical to both the continued
existence of the Company and the successful delivery of its
long-term strategy. Nowhere was this better demonstrated
than at the requisitioned general meeting and AGM in the
year. Feedback from shareholders was key to helping form
the decisions of the board. In this, the board is mindful of its
duty to act fairly between shareholders and is focused on
fostering good working relationships with shareholders and
on understanding the views of shareholders.
A fundamental consideration of the board is whether the
investment objective of the Company is continuing to meet
shareholder expectations. The board’s strategy is validated on
a triennial basis – the last vote was in March 2025 with
65.27% (2022 triennial AGM vote: 99.99%) of shareholders
voting for the continuation of the Company and the next
continuation vote will be proposed at the AGM in 2028.
Excluding the votes that the board believed were cast by
asignificant minority shareholder, more than 99% of all other
votes were in favour of continuation.
The board places great importance on communication with
all its shareholders and maintaining an open dialogue with
them. The principal forum for this is the AGM. The
Company’s annual financial report is published generally in
time to give shareholders at least 20 working days
’ notice of
the AGM. Details of the proxy voting position on each
resolution are published on the Company’s website shortly
after the AGM. At the requisitioned general meeting in
January 2025, and the Company’s most recent AGM held in
March 2025, shareholders had the opportunity to meet with
the board and the Manager and raise questions and
concerns.
The board regularly monitors the shareholder profile of the
Company. It aims to provide shareholders with a full
understanding of the Company’s activities and performance,
and it reports formally to shareholders twice a year by way of
the annual and half-yearly financial reports. This is
supplemented by the daily publication of the Company’s net
asset value, routine and ad hoc regulatory announcements,
monthly factsheets and other information placed on the
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STRATEGIC REPORT CONTINUED
Manager’s website, including pre-investment information,
portfolio disclosures, terms of reference and the Company’s
share price.
One of the board’s objectives has been, along with the
Manager, to ensure shareholder engagement is sufficient.
The board has endorsed the ongoing appointment of
QuotedData, a provider of research notes on the Company,
and retains joint brokers, Singer Capital Markets Securities
Limited and Peel Hunt LLP. During the year, the board also
engaged JPMorgan Cazenove to act as a corporate adviser
and DF King to engage with shareholders prior to the January
2025 requisitioned general meeting. The chairman and
directors are available to meet on a one-to-one basis with
the institutional shareholders with or without either brokers
or the Manager present. The chairman undertook a
significant number of meetings with institutional
shareholders and Saba during the year. The Company’s
brokers and Manager also held regular discussions with the
larger shareholders. Feedback from shareholder engagement
is reported to the board. Shareholders wishing to contact the
chairman or any other member of the board may do so at
any time by writing to the company secretary.
Consumer Duty
The FCA’s Consumer Duty rules comprise a fundamental
component of the FCA’s consumer protection strategy and
aim to improve outcomes for retail customers across the
entire financial services industry through the assessment of
various outcomes, one of which is an assessment of whether
a product provides value. Under the Consumer Duty, the
Manager is the product manufacturer of the Company and
therefore the Manager is required to complete a fair value
assessment on a regular basis. As at July 2025, the Manager
assessed the Company as “expected to provide fair value for
the reasonably foreseeable period”. The board has an
understanding of the Manager’s basis of assessment and no
concerns have been identified with either the assessment
method or the outcome of the assessment.
THE MANAGER
The Manager is the principal service provider and supplies
investment management and administration services to the
Company. Details of the investment management contract
are shown on pages 40.
The board seeks to engage with the Manager in
acollaborative and collegiate manner, encouraging open and
constructive discussion and debate, whilst also ensuring that
there is appropriate and regular challenge. At all board
meetings there is a dialogue with the lead investment
manager, Katie Potts except where the Manager’s attendance
is not appropriate for governance reasons. In addition, other
members of the investment team attend board meetings to
provide updates on specific sectors or geographies in which
the portfolio is invested. A principal consideration of the
board is whether the Manager is performing in accordance
with the Company’s investment objective and investment
policies. This consideration, as quantified by the KPIs
described earlier in the Strategic Report, is discussed at all
board meetings and at the board’s annual strategy meeting
and explained to shareholders in detail in the Manager’s
Report.
The investment management section of the Strategic
Reportsets out the key terms of the management
agreement. During the year, the board established
aManagement Engagement Committee (“MEC”), and this
committee undertook a comprehensive review of the
performance of the Manager, its remuneration and the
discharge of its contractual obligations.
A number of directors of HIML Holdings Limited and
employees of the Manager have shareholdings in the
Company, further aligning the Manager’s interests with
thoseof the Company’s shareholders.
OTHER SERVICE PROVIDERS
Other key service providers comprise the company secretary,
the administrator, the depositary, the custodian, the brokers,
the registrar and the auditor. The continuance, or otherwise,
of the engagement of these were reviewed by the MEC in the
year and are reviewed every year to ensure that the Company
continues to receive high quality services at acompetitive
cost.
Day to day dealings with the other key service providers are,
in general, conducted by the Manager with periodic reports
being provided to the board and an emphasis by both the
Manager and the directors on constructive and transparent
relationships.
In maintaining the Company’s reputation and high standards
of business conduct, the board is provided with regular
reports from the Company’s brokers and company secretary.
These alert the board to recent changes in regulation and
market practice, as well as any likely reputational threats
which, in turn, influence the board’s decision-making
process. The board also seeks annual assurance from its
service providers as regards governance, including
whistleblowing, prevention of tax evasion and anti-bribery
policy and procedures.
INVESTEE COMPANIES, THE ENVIRONMENT AND WIDER
ECONOMY
As stated earlier, as an investment trust with no trading
activity or employees, the Company has little direct impact
on the social community or the environment. It is a low
energy user in relation to the carbon reporting regulations
and is exempt from the relevant disclosure requirements.
Agreenhouse gas emissions statement is included in the
Directors’ Report on page 50 and the Company has given
shareholders the option to receive electronic copies of
annual reports and other information.
However, the Company has indirect interests through its
investment portfolio. The Company’s long-term success is
derived from the underlying success of the technology and
communications businesses in which it is invested through
the expertise of the Manager. The Manager in turn is
committed to being a long-term and responsible investor.
The directors believe that the Company is making a positive
contribution to addressing the challenges posed by climate
change through its investments in companies involved in, for
example, renewable energy and its supply chain, companies
which develop software which enables more efficient work
processes and companies which produce power efficient
components. In addition, the Manager’s Stewardship Report
(further described below) sets out the Manager’s approach to
encouraging investee companies to consider environmental
factors in a way that is proportionate to their size.
The Manager is committed to being a responsible investor
and applies, and is a signatory to, the United Nations
Principles for Responsible Investment (“PRI”), which
demonstrates its extensive efforts in terms of the integration
of ESG factors into the investment process, active ownership,
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investor collaboration and transparency. Further details of
responsible investing, ESG and stewardship matters are dealt
with on pages 40 and 41 of the Strategic Report.
All engagement with investee companies in the portfolio is
through the Manager and, if strategically relevant, reported to
the board. Following the introduction of the UK Stewardship
Code 2020 by the Financial Reporting Council (FRC), the
Manager refreshed the explanation of its approach to the
stewardship of its clients’ assets. This included the
formalisation of the Manager’s Stewardship Approach and
Policy, which was discussed and approved by the board. The
Manager has been a signatory to the UK Stewardship Code
2020 since September 2022. The board regularly reviews the
voting record of the Manager and the detailed reports which
set out the reasons why the Manager has voted against
investee company management recommendations and/or
against the recommendations of third party proxy advisors.
The Stewardship Approach and Policy, the Stewardship Code
Report and a summary of the 2025 Voting Record are
available on the Manager’s website www.heralduk.com.
The Company has investments in early-stage companies –
frequently companies which have not reached profitability.
Secondary fund raisings are often required for them to reach
profitability while other companies seek more capital to
acquire businesses. The Manager endeavours to support
these follow-on fund raisings as long as it is in the interests
of the Company’s shareholders. This supportive approach to
investee companies, combined with a willingness to engage
directly with their management, helps to underpin the
Manager’s reputation as an attractive source of finance
among potential investees and brokers. Bearing this in mind,
as well as several other factors including market conditions,
the economic cycle and liquidity, the directors have adopted
a conservative gearing policy. Borrowing facilities are a board
decision, but within this policy the Manager decides on net
cash or gearing levels which are reported on and discussed
at every quarterly board meeting.
KEY DECISIONS
Key decisions and action taken by the board during the year
which required the directors to have regard to the factors set
out in s172 of the Companies Act 2006, included:
— Prior to the requisition of a general meeting by Saba, the
board had put in contingency plans for possible activist
activity. These plans were invoked following receipt of
the requisition on18 December 2024, and included the
appointment ofadvisers to the Company necessary for
the lead into and holding of the requisitioned general
meeting on 22January 2025. Costs were a key
consideration for the board and where possible these
were kept to a minimum. The total costs incurred in
connection with the requisitioned general meeting were
£604,000. This meeting saw a resounding defeat of the
attempt by Saba to replace the board with its own
nominees. This period saw an enhanced level of
engagement with all shareholders, resulting in
significantly increased shareholder engagement than in
previous years and rejection of all the resolutions.
— The board reaffirmed its belief in the long-term objective
of the Company and therefore recommended that
shareholders vote for the continuation of the Company
atthe 2025 AGM. The triennial continuation vote passed,
with Saba again being nearly the only shareholder to vote
against the board’s recommendation.
— Following the annual appraisal of the Manager by the
Management Engagement Committee, the board
resolved to continue the appointment of the Manager as
it considers this to be in the best interests of the
Company and its stakeholders.
— Stewardship Approach and Policy and the Stewardship
Code Report: As stated earlier, the board regularly
reviewed stewardship matters during the year and is
pleased to report that the Manager continues to be
asignatory to the FRC Stewardship Code 2020, which
seeks to improve the quality of engagement between
institutional investors and companies to help improve
long-term returns to shareholders and to ensure the
efficient exercise of governance responsibilities.
— The board reviewed the Manager’s latest Climate Report
for the Company which is available on the Company’s
website.
— During the year the directors decided to endorse the
Manager’s recommendation not to put in place any
borrowing facility, because of the cost of borrowing,
continued challenging liquidity and the uncertain
macroeconomic environment. The directors will consider
adopting leverage when market conditions seem
appropriate.
— During the year, the board regularly reviewed buyback
levels and endorsed the continuation of the Manager’s
approach.
The directors are cognisant of their duty under s172 in their
deliberations as a board on all matters. Decisions made by
the board take into account the interests of all the
Company’s key stakeholders and reflect the board’s belief
that the long-term sustainable success of the Company is
linked directly to its key stakeholders.
VIABILITY STATEMENT
The Company, as an investment trust, is a collective
investment vehicle designed and managed for the long-term.
The directors consider that three years is an appropriate
forward-looking time period to consider viability. This
recognises the Company’s investment strategy, which
includes investment in smaller companies, some of which are
early-stage and for which a three-year horizon is a
meaningful period over which to judge prospects, the board’s
assessment of the main risks that threaten the ongoing
business model and the relatively fast-moving nature of the
sectors in which the Company invests. Inevitably, investment
in smaller and early-stage companies carries higher risks,
both in terms of stock liquidity and longer-term business
viability and this risk is accepted by the board as necessary to
seek to deliver high returns.
There are no current plans to amend the investment strategy,
which has delivered good investment performance for
shareholders over many years and, the directors believe,
should continue to do so. The investment strategy and its
associated risks are kept under constant review by the board.
The board undertook a robust assessment of the risks
pertaining to the Company during the year, including risks to
the Company’s viability, and this is set out in the principal
risks and uncertainties section. This assessment included
emerging risks such as ongoing global tensions (armed
conflicts, global trade tariffs), the risk arising from the recent
increase in minority activist shareholder concentration, and
continuing negative growing effects of climate change. As
part of this, the board considered several severe but plausible
scenarios, including the impact of significant market
movements.
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STRATEGIC REPORT CONTINUED
Other items relevant in the directors’ assessment of the
Company’s viability were: income and expenses projections
and the expectation that a majority of the Company’s
investments comprise readily realisable securities as
substantiated by liquidity analysis of the portfolio; and the
fact that as a closed-ended investment company, the
Company is not affected by the liquidity issues of open-
ended companies caused by large or unexpected
redemptions.
The board takes account of the triennial shareholder vote on
whether the Company should continue as an investment
trust. At the AGM in March 2025, 65.27% of votes cast were in
favour of continuation (AGM vote in favour: 2022 – 99.99%
and 2019 – 99.88%), with the lower than normal vote in
favour reflecting an activist voting against the resolution
following the failure of the January 2025 requisitioned
general meeting resolutions to replace the board with the
activist’s nominees. The next vote, which is an ordinary
resolution, will be at the Company’s AGM in 2028.
Accordingly, the directors confirm that, based on the above
and on reviews conducted as part of the detailed internal
controls and risk management processes set out on pages 46
and 47, they have a reasonable expectation that the
Company will continue to maintain its status as an
investment trust, to implement its investment strategy and to
operate and be able to meet its liabilities as they fall due for
at least the next three financial years.
The directors’ assessment of the viability of the Company has
also taken into account its communications with, and the
actions of, Saba. The latter include Saba’s requisitioned
general meeting in January 2025 (which failed to remove the
directors, amongst other things), and Saba’s votes against the
re-election of directors and the continuation vote (amongst
other things) at the Company’s AGM later in March.
Saba’s significant minority shareholding means that it can
block all special (75%) resolution votes, as demonstrated at
the AGM. Therefore, as explained in more detail in the
Chairman’s Statement on pages 8 and 9, on 9 January 2026
the Company issued an announcement that the board had
assessed that it is not sustainable to do nothing given that a
process of attrition may eventually see Saba able to win a
simple majority vote even though it itself is a minority
shareholder, and launched a Tender Offer. The Tender Offer
was subsequently cancelled and the board is currently in
dialogue with Saba, however, the outcome of this is
uncertain and the option to go ahead with the Backstop
Tender remains. Notwithstanding the possible strategic
outcomes of the discussions or the Backstop Tender, the
Company’s ability to meet its liabilities as they fall due
remains, as does its financial and operational ability.
However, were an action proposed by
the Company to result
in the Company changing its investment strategy and/or
business model, the period over which it would be
reasonable to assess the viability of the Company could be
significantly changed, as is also the case were the Company
to propose a wind up. These considerations do not affect the
underlying viability of the Company.
INVESTMENT MANAGEMENT
The management contract with HIML is terminable on
12months’ notice by either party. The senior director of
HIML, with overall responsibility for the management of the
Company’s portfolio, is Katie Potts, who is also a substantial
shareholder of HIML Holdings Limited, the parent company
of HIML. For the year under review, HIML was remunerated at
an annual rate of 1.0% of the Company’s net asset value
(excluding current year net revenue) up to £1.25bn and
0.8%thereafter, calculated using middle-market prices. There
is no performance fee in place. Compensation fees would
only be payable in respect of this 12-month notice period if
termination were to occur sooner.
The board considers that maintaining an appropriate level of
ongoing charges for a specialist trust is in the best interest of
all shareholders. The board is also of the view that calculating
the fee with reference to performance would be unlikely to
exert a positive influence over the long-term performance.
At 31 December 2025, Katie Potts held 354,684 or 0.7% (2024
– 344,165 or 0.7% respectively) of the Company’s shares.
In addition, HIML Holdings Limited held 178,473 shares (0.4%)
in the Company (2024 – 213,473 or (0.4)% respectively) and
anumber of directors of HIML Holdings Limited and
employees of the Manager have shareholdings in the
Company. At 31 December 2025, the Company was the
beneficial owner of 15.4% (2024 – 15.4%) of the ordinary
share capital of HIML Holdings Limited.
The board considers the investment management
arrangements for the Company on a continuing basis and
aformal review is conducted annually. The board considers,
amongst others, the following topics in its review: investment
performance in relation to the investment policy and
strategy; the continuity of personnel managing the assets
and reporting to the board; the level of service provided in
terms of the accuracy and timeliness of reports to the board
and the frequency and quality of both verbal and written
communications with shareholders.
Following the most recent review, the board is of the opinion
that the continued appointment of HIML as Manager, on the
current terms, is in the interests of shareholders due to the
experience of the Manager’s investment team, the strengths
of the investment process, the track record of performance
and the quality of service and information provided to the
board.
RESPONSIBLE INVESTING, ESG AND STEWARDSHIP
The United Nations PRI defines responsible investing as
astrategy and practice to incorporate environmental, social
and governance factors in investment decisions and active
ownership. The Stewardship Code 2020 sets out the
principles of stewardship which it defines as the responsible
allocation, management and oversight of capital to create
long-term value for clients and beneficiaries leading to
sustainable benefits for the economy, the environment and
society.
The board has delegated the management of the Company’s
investments to the Manager, HIML, and seeks to ensure that
HIML has a sensible and systematic approach to stewardship.
The board has adopted HIML’s suggested approach, after
considerable deliberations by the board with HIML. As well as
designing a robust framework, HIML regularly evidences to
the board that it has implemented its policies to act as a
responsible investor on an on-going basis.
In relation to the portfolio, HIML has in turn documented its
approach to environmental, social and governance (“ESG”)
factors which sets out a number of objectives and criteria
that are considered in the context of its responsibility to
manage investments in the financial interests of
shareholders. Thus, whilst ESG is effectively integrated into
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the Manager’s investment process, the Company does not
have a sustainability objective or seek to achieve any
particular sustainability outcome and its investment policy
does not have specific sustainability characteristics.
As an investment company with no employees, property or
activities outside investment, environmental policy has
limited direct application for the Company. Nevertheless, the
board is required to make a statement on greenhouse gas
emissions and this is included in the Directors’ Report on
page 50.
HIML’s, and thus the Company’s, approach to responsible
investing follows:
1. HIML does not exclude companies from its investment
universe purely on the grounds of an ESG issue although
the technology and communications focus of Herald
implicitly limits investment in a number of the most
environmentally damaging sectors, such as coal mining
or generating energy by burning fossil fuels.
2. It adopts a positive engagement approach whereby
matters are discussed with the management of portfolio
companies with the aim of sharing best practice,
improving the portfolio companies’ relevant policies and
management systems and enabling HIML to consider
how ESG factors could impact long-term investment
returns.
3. HIML’s focus on the newer sectors of the economy
means that it believes that in aggregate investee
companies assist in improving the world environmentally.
The largest component of the portfolio is software, which
provides efficiencies for enterprises, governments and
consumers. Other sectors of the portfolio often provide
and improve the enabling supply chain. Technology also
provides energy efficient communications, entertainment
and more; and HIML firmly believes that capitalism and
technological innovation combined offer the best
prospects to address the environmental challenges we
face. This is in contrast to the environmental impact of
the older parts of the economy such as transport,
extractive industries or heavy industrial sectors where
HIML does not invest. The majority of investments in the
technology and communications sectors have a low
carbon footprint and the carbon emissions of the
portfolio are estimated to be a fraction of those relative
to the large companies’ indices in the UK and US.
Furthermore, much of the world’s most advanced
technology and intellectual property tends to reside in
the wealthiest and most advanced economies, which
themselves have strict social and environmental
standards.
4. HIML is a signatory of the PRI, the globally recognised
accord for responsible investment. HIML is also a
signatory to the FRC Stewardship Code 2020. In addition,
HIML is a supporter of the Task Force on Climate-related
Financial Disclosures (“TCFD”). HIML contributes to the
development of the rules that govern smaller companies
through its participation in the Quoted Companies
Alliance (“QCA”) and its committees including the QCA
secondary markets group and the QCA remuneration and
corporate governance committees which produce the
guides outlining best practice for UK quoted small
companies. HIML’s investment team undertake in-depth
company research, seeking to identify sustainable
competitive advantages that enable businesses to
generate excess returns on capital and predictable cash
flow. As bottom-up fundamental investors, the team
consider the ESG risks that are material alongside other
risks faced by companies in the portfolio. They investigate
and incorporate any problematic issues into their
assessment and decision-making process; and portfolio
holdings are closely monitored throughout the time that
the Company are shareholders.
5. HIML actively encourages company management to
think about employees, customers and broader
stakeholders ahead of short-term shareholder returns,
and firmly believe that this leads to the best long-term
outcomes for shareholders. This includes engaging and
interacting with company management on strategy,
performance, governance, risk management and their
treatment of employees.
6. HIML votes the vast majority of the Company’s shares in
investee companies by proxy using the ISS system,
although in exceptional circumstances, HIML will attend
meetings where the Company has large holdings and
there is a contentious issue and where attendance in
person, rather than voting by proxy, is in the Company’s
best interests. Given the wide range of company sizes
and variety of governance and regulatory environments,
HIML does not believe that it is sensible to enforce
prescriptive policies and rules. Furthermore, such an
approach may well prove to be damaging. Voting
decisions made by HIML’s investment team reflect all the
knowledge they have on the industry, company and
management as well as incorporating input from
specialist information sources.
PROXY VOTING
2025 2024
Number of meetings 331 399
Number of meetings voted at 329 398
Number of meetings voted against management 20 39
Number of resolutions 2,996 3,692
Number of resolutions voted against management 34 71
Number of resolutions where abstained or
vote withheld 14 37
During 2025 votes were cast against or abstained where
there were concerns about board composition,
remuneration, governance, auditors, erosion of shareholder
rights and delisting.
Further details on Responsible Investing, ESG and
Stewardship can be found on HIML’s website at
www.heralduk.com.
CLIMATE CHANGE REPORTING
The Company does not seek specific climate outcomes as
part of its investment objective. However, the need to create
a more sustainable world represents a considerable upside
opportunity for companies contributing to the transition, and
a significant downside risk for those which do not. Given the
long-term investment time horizon of at least five years, this
encompasses not only the risks from climate change itself
but also how market forces and regulation could influence
the potential returns for shareholders.
As explained in the Responsible Investing, ESG and
Stewardship section on pages 40 and 41, responsible
investing incorporates environmental factors, which includes
climate change. The board supports the aim of the TCFD for
more effective disclosure of climate-related financial risks
and opportunities across the economy and financial system,
which in turn help the Manager better assess climate-related
risks and opportunities as part of its investment decisions.
Although the TCFD was disbanded in 2023, the TCFD’s
recommendations remain applicable with the IFRS
Foundation taking over the monitoring of the progress of
companies’ climate-related disclosures.
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Herald Investment Trust plc
Annual report & financial statements 2025
STRATEGIC REPORT CONTINUED
The Manager is also a supporter of the aim of the TCFD and
has historically reported annually on its climate risks and
emissions. Although the Company as an investment
company is exempt from the requirement to produce a TCFD
report, the Manager has produced its third Climate Report in
line with TCFD recommendations for the Company as at
March 2025 (the same date as the Manager’s reporting). The
report layout mirrors the TCFD four core recommendations:
governance; strategy; risk management; and metrics and
targets and includes the estimated emissions of the
Company. The Climate Report can be found on the
Manager’s website: www.heralduk.com.
Emissions
Given the focus of the Company on investing in small
companies in the technology and communications sector,
the Company’s portfolio has a relatively low carbon intensity
and carbon footprint compared to the wider economy and
minimal exposure to “TCFD climate material” sectors. The
Company does not target a specific level of CO2 emissions.
Companies within the technology and communications
sector tend to be enablers of environmental efficiency rather
than contributors to substantial environmental damage.
There is a significant and current environmental challenge
from the enormous and rapidly increasing power
consumption of AI data centres, however, the large AI
companies remain committed to their net zero targets and
are investing billions in green power (frequently nuclear) to
produce the electricity they need.
As climate change and its effects will continue to pose ever
changing systemic risks, the Manager has developed a more
focused emissions based risk methodology to help identify
portfolio companies which may be high emitters. This risk
ranking of the portfolio from lowest to highest risk is set out
in the table that follows. No portfolio companies are in the
highest rating.
The Manager’s Climate Change Risk Matrix Analysis of the
Company’s portfolio
†
Number of Companies
Risk Matrix in HIT Portfolio %
1 – Lowest 177 59
2 – Low 20 7
3 – Medium Low 6 2
4 – Medium High 98 32
5 – High 1 0
6 – Highest 0 0
302 100
The following table analyses those portfolio companies risk
rated medium or above.
Emission Risk Factor BICS Level 3 Sectors Value £m % AUM
5 – High Chemicals 2.6 0.19
2.6 0.19
4 – Medium High Automotive 1.2 0.09
Electrical Equipment 38.2 2.88
Forestry, Paper & Wood Products 0.8 0.06
Semiconductors 110.9 8.37
Technology Hardware 172.4 13.01
323.5 24.41
3 – Medium Low Aerospace & Defence 20.4 1.54
E-Commerce Discretionary 1.3 0.09
Industrial Intermediate Products 22.5 1.70
Wholesale – Discretionary 3.9 0.29
48.1 3.62
† Emissions data based on portfolio holdings as at 31 March 2025.
Companies which have a medium risk factor and above, have
further analysis undertaken by the Manager, and engagement
is undertaken where relevant. Where applicable, voting will
be used, including for relevant shareholder resolutions. The
level of engagement on ESG issues is also considered in the
context of the relative size of the shareholding. Information
with regards to individual company engagements are
reported in the Manager’s annual Stewardship Report
available on the website (www.heralduk.com).
The Manager actively encourages investee companies to
reduce emissions and to improve climate-related disclosures
but recognises that there is an additional cost to this. Many of
the companies in the portfolio are early -stage and have far
more limited resources for providing comprehensive ESG
reports than larger, more established companies.
TCFD Reporting Targets
In 2025 the Manager actively executed its climate
engagement strategy, which focuses on encouraging
companies in the high risk sectors (Medium High, High,
Highest), to report Scope 1 & 2 emissions and, where
applicable, to introduce an emissions reduction plan. After
adetailed review of portfolio holdings emissions reporting,
which included consideration of climate change risk and
business scale, a total of nineteen companies were
contacted and it was requested that they consider improving
their emissions reporting. The current status and reporting
targets set for the Company’s portfolio holdings are shown in
the table below.
Status 31 March Short-Term Long-Term
High Risk Sectors (Medium High, 2025 2024 (2030) (2040)
High, Highest)† Target Target
% Reporting Scope 1&2 By Value 73% 77% 90% 100%
% Emissions Reduction Plan By Value 58% 66% 90% 100%
Short-Term Long-Term
(2030) (2040)
Total Portfolio† Target Target
% Reporting Scope 1&2 By Value 64% 63% 60% 90%
% Emissions Reduction Plan By Value 44% 42% 50% 90%
† Data based on portfolio holdings as at 31 March 2025.
Significant progress on improving emissions reporting has
been made by portfolio holdings in the last year, we expect
that this trend will continue, however there is increased
uncertainty, in particular due to attitudes to ‘green’ policies in
the United States.
Comments on Metrics and Targets in General
The Climate Report prepared by the Manager contains
metrics for the portfolio including, but not limited to: Carbon
Footprint; Weighted Average Carbon Intensity; and
Emissions. These metrics and further information with
regards to the challenges of data collection, estimation and
aggregation can be found in this Climate Report on the
Manager’s website: www.heralduk.com.
On behalf of the board
ANDREW JOY
CHAIRMAN
20 February 2026
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Annual report & financial statements 2025
YOUR BOARD OF DIRECTORS
ANDREW JOY
Andrew Joy was appointed to the board on 1 October 2022
and became Chairman of the board and the nomination
committee on 18 April 2023. Andrew is a senior advisor of
Stonehage Fleming, a leading international multi-family
office and chairman of the investment committee of FPE
Capital.
Andrew was one of the founding partners of Cinven,
aleading private equity firm investing in Europe and U.S.
andhas been chairman or director of numerous growth
companies over the past 30 years. He was previously
chairman of the British Venture Capital and Private Equity
Association, The Biotech Growth Trust plc and a director of
the European Venture Capital Association.
He is highly regarded for his extensive knowledge of the
financial sector and of the high-growth part of the smaller
company sector.
STEPHANIE EASTMENT
Stephanie Eastment was appointed to the board on
1December 2018 and is chair of the audit committee. She
isthe non-executive senior independent director of Murray
Income Trust plc, a non-executive director and audit
chairman of Impax Environmental Markets plc and Alternative
Income REIT plc, and a non-executive director of RBS
Collective Investment Funds Limited.
Stephanie qualified as a chartered accountant at KPMG and
subsequently worked in financial services for Wardley Asset
Management and UBS (with roles in accounts, compliance
and taxation) before moving to Invesco Asset Management
where she specialised in investment companies for 22 years.
She is also a chartered company secretary.
She has extensive accounting, corporate governance and
investment trust sector experience and provides constructive
oversight and challenge not only as a director, but as the
audit committee chair.
PRIYA GUHA MBE
Priya Guha MBE was appointed to the board on 13 December
2023. She has a portfolio of roles across the global and
UKtechnology and innovation landscape including as
anon-executive director at UK Research & Innovation and
the Digital Catapult, a member of the Investment
Governance Board at Future Planet Capital, a UK VC Fund
and an advisor to various start-up companies including
Gallos Technologies. She is also a non-executive director at
Reach PLC and chairs its sustainability committee.
She has significant knowledge of the global technology
sector and valuable experience in both public and private
sectors.
HENRIETTA MARSH
Henrietta Marsh was appointed to the board on 1 September
2019, and became senior independent director on 24 March
2025. She has a background in fund management, having
worked in UK small cap and private equity investment over
several decades. From 2005 until 2011, she was AIM fund
manager at Living Bridge Equity Partners. Prior to that,
Henrietta spent 14years at 3i in several roles, including in
private equity and as fund manager of 3i Smaller Quoted
Companies Trust plc (1997–2002). Her earlier career was
with Morgan Stanley and Shell. More recently she has
pursued a non ex
ecutive career, having served on the boards
of discoverIE plc, Alternative Networks plc, Electric Word plc
and Gamma Communications plc (AIM-listed) where she was
the senior independent director.
She has direct experience and understanding of the
investment process required in the Company. She takes the
lead on the board in reviewing HIML’s stewardship approach.
CHRISTOPHER METCALFE
Christopher Metcalfe was appointed to the board on 24 April
2024 and was appointed chairman of the newly formed
Management Engagement Committee on 20 February 2025.
Christopher is currently chairman of Franklin Global Trust plc
and a non-executive director of JP Morgan US Smaller
Companies Investment Trust plc and Columbia Threadneedle
UK Capital and Income Investment Trust plc. He was
previously a non-executive director of abrdn Smaller
Companies Income Trust plc until its merger with Shires
Income plc in December 2023.
He has considerable investment management experience
and a deep understanding of UK investors having worked
previously in senior fund management positions at Newton
Investment Management, Schroder Investment Management
and Henderson Administration Group plc.
All directors are, in the opinion of the board, independent of
the management company.
All directors are non-executive.
All directors are members of the audit committee except for
the chairman. All directors are members of the nomination
and management engagement committees.
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Annual report & financial statements 2025
CORPORATE GOVERNANCE REPORT
GOVERNANCE PRINCIPLES
The board is committed to achieving and demonstrating
high standards of corporate governance, including
consideration of the best interests of all shareholders. This
statement outlines how governance principles were applied
throughout the financial year. The UK Corporate
Governance Code (“UK Code”) issued by the Financial
Reporting Council (“FRC”) in 2024 and the AIC Code of
Corporate Governance (“AIC Code”) issued in 2024 are the
applicable governance codes in this regard.
The FRC has confirmed that by following the AIC Code,
investment company boards will meet their obligations in
relation to the UK Code and paragraph 6.6.6 of the
UKListing Rules. The AIC Code is available on the AIC
website at www.theaic.co.uk, and the UK Code on the FRC
website at www.frc.org.uk.
STATEMENT OF COMPLIANCE
The directors believe that the Company has complied with
the AIC Code during the year and up to the date of this
report, and thereby the provisions of the UK Code except as
set out below.
The UK Code includes provisions relating to the role of the
chief executive; executive directors’ remuneration; and the
need for an internal audit function. As an investment
company which outsources its administration to third-party
providers, the Company has no chief executive or other
executives and therefore these provisions are not
applicable. It does not maintain an internal audit function.
The audit committee considers the need for such a
function at least annually and additional detail is provided
later on in this statement.
THE ROLE OF THE BOARD
The board has overall responsibility for the Company’s
affairs and for setting the Company’s purpose and strategy.
The s172 Statement on pages 37 to 39 sets out in detail the
parties, shareholders and other stakeholders, and factors
the directors consider as they perform their duties and the
board its role. There is an annual cycle of board meetings.
Aformal schedule of matters reserved for the board has
been established covering strategy; structure and capital;
investment objective, policy and limits; gearing; dividend
and corporate governance policy; performance; key
contracts; risk; financial reporting and board membership.
This is reviewed annually to ensure compliance with latest
regulatory requirements and best market practice.
The board is responsible for the approval of the annual and
half-yearly reports and board- published documents and for
ensuring that such documents provide a fair, balanced and
understandable assessment of the Company’s position and
prospects.
The board’s oversight of the Company’s risk management
and internal controls is set out in detail later in this report
on pages 46 and 47. Full and timely information is provided
to the board to enable it to function effectively and to allow
directors to discharge their responsibilities.
CHAIRMAN
The chairman of the Company, Andrew Joy, is responsible
for organising the business of the board, ensuring its
effectiveness and setting its agenda.
SENIOR INDEPENDENT DIRECTOR (“SID”)
Following James Will’s retirement, Henrietta Marsh was
appointed as the senior independent director on 24 March
2025. The SID provides a sounding board for the chairman;
is an intermediary for other directors if required; and is an
additional channel for shareholders if contact through the
chair or company secretary has failed to resolve an issue or
where that channel would not be appropriate.
BOARD COMPOSITION AND INDEPENDENCE OF
DIRECTORS
At the year end the board comprised five directors. All are
non-executive. All directors will retire at the AGM and offer
themselves for re-election.
The directors believe that the board has a balance of skills
and experience which enable it to provide effective
leadership and proper governance of the Company.
All the directors are considered by the board to be
independent, of the Manager and free of any business or
other relationship which could interfere with the exercise of
their independent judgement.
There is an agreed procedure for directors to seek
independent professional advice if necessary at the
Company’s expense.
Conflicts of interest are unusual but in the event of one
occurring, there is an established procedure to manage
them.
BOARD DIVERSITY
Diversity policy
Appointments are based on merit with due regard to the
benefits of diversity. The board considers many factors,
including the balance of skills, knowledge, experience,
inclusion and equal opportunities when reviewing its
composition and appointing new directors. The aim of the
policy is to identify those with the best range of skills and
experience to complement existing directors in order to
provide effective oversight of the Company and constructive
support and challenge to the Manager. Summary
biographical details of the directors, including theirrelevant
experience, are set out on page 43.
Implementation of the Board’s Diversity Policy
The board reports against the “comply or explain” statement
targets set out in the FCA’s UK Listing Rules 6.6.6R(9)(a) that
at least 40% of individuals on the board should be women; at
least one individual on the board should be from a minority
ethnic background; and at least one of the senior board
positions of Chair, SID, CEO and CFO should be held by
awoman.
At 31 December 2025, and at the date this annual report
andfinancial statements was signed, the board comprised
five non-executive directors. All targets are met as there are
three women on the board (60%); one director is from
aminority ethnic background and the SID position is held by
awoman. Furthermore, the board considers that the chair of
the audit committee of an investment company is a senior
position, and this is held by a woman.
Board as at 31 December 2025
The information in the following table has been provided by
each director. As the Company has no employees, no
information is included for executive management. The
board has resolved that the Company’s year end date be the
most appropriate date for disclosure purposes. There have
been no changes since 31December 2025.
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Herald Investment Trust plc
Annual report & financial statements 2025
Number of
Number of Percentage of senior positions
board members the board on the board
Men 2 40% 1
Women 3 60% 1
Number of
Number of Percentage of senior positions
board members the board on the board
White British or
other White
(including
minority-white
groups) 4 80% 2
Mixed/Multiple
Ethnic Groups 1 20% 0
TERMS OF APPOINTMENT
The terms and conditions of directors’ appointments are set
out in formal letters of appointment which are available for
inspection upon request. There are no service contracts
between the Company and any of the directors.
Under the provisions of the Company’s articles of
association, a director appointed during the year is required
to retire and seek election by shareholders at the next AGM.
All directors retire annually and, if appropriate, offer
themselves for re-election.
DIRECTORS’ MEETINGS
The board considers that it meets sufficiently regularly to
discharge its duties effectively. The table below shows the
attendance record for scheduled board and committee
meetings held during the year, including the annual strategy
day, the requisitioned general meeting and the annual
general meeting. In addition, directors attended a significant
number of non-scheduled board and other ad-hoc meetings
throughout the year.
Board and Management
General Audit Nomination Engagement
Number of Meetings Committee Committee Committee
scheduled meetings 7 2 1 1
Andrew Joy
1
7 2 1 1
Stephanie
Eastment 7 2 1 1
Priya Guha 7 2 1 1
Henrietta Marsh 7 2 1 1
Christopher Metcalfe 7 2 1 1
James Will
2
4 1 1 1
1 The chairman is not a member of the audit committee but attends the
committee by invitation from the audit committee chairman.
2 James Will retired from the board on 24 March 2025. He attended all
meetings up to his retirement.
COMMITTEES OF THE BOARD
The board has three committees: the audit committee, the
nomination committee and the newly formed management
engagement committee. The role, responsibilities and
activities during the year of the audit committee are detailed
in its report on page 48 and those for the nomination and
management engagement committees are shown below.
A separate remuneration committee has not been
established as all directors are non-executive and the board
as a whole considers directors’ remuneration in line with the
remuneration policy set out on page 52.
DIRECTORS: RE-ELECTIONS
All directors standing for re-election at the forthcoming AGM
served throughout the year. The biographies of the directors
are set out on page43 and are incorporated into this report
by reference. They include the skills and experience that
each director brings to the board in order to contribute to
the long-term sustainable success of the Company. The
attendance record of each director at meetings of the board
and its committees throughout the year is shown in the
Directors’ Meetings section.
NOMINATION COMMITTEE
The nomination committee consists of all the directors and is
chaired by the chairman of the board. The committee meets
on an annual basis and at such other times as may be
required. The committee has written terms of reference
which include identifying and nominating new candidates for
appointment to the board including engagement of
independent search consultants, board and director
appraisal, succession planning and training. The committee
also considers whether directors should be recommended
for re-election by shareholders. The committee is
responsible for considering directors’ potential conflicts of
interest and for making recommendations to the board on
whether or not the potential conflicts should be authorised.
The terms of reference are reviewed annually and are
available on request from the company secretary and at
www.heralduk.com.
Appointments to the Board
Appointments to the board are made on merit. They are
assessed in accordance with the following standards:
— when seeking to recruit, the committee will evaluate the
skills, experience, independence, knowledge and diversity
of the board and prepare a description of the role and
capabilities required to fulfil the appointment and will
normally appoint an independent agency to assist in the
recruitment process or use open advertisements;
— the committee will ensure that a diverse group of
candidates is considered;
— candidates will be considered against objective criteria
having regards to the benefits of diversity – including
inclusion and equal opportunities and personal strengths,
experience and knowledge; and
— the demands on each candidate’s time and consideration
of their other commitments.
During the year the committee held one scheduled meeting
and as well as a number of ad hoc meetings and undertook
the following activities:
— updated the Company’s succession planning;
— reviewed the board and its committees’ structure, size,
composition and culture, and considered the skills
required of current and future directors;
— undertook a board performance review as detailed further
below;
— considered the independence of each director;
— considered each director’s time commitment;
— considered the board’s skills matrix;
— reviewed and approved the Company’s diversity policy
statement and disclosure on diversity targets; and
— reviewed and approved the Company’s tenure and
succession planning policy.
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CORPORATE GOVERNANCE REPORT CONTINUED
Board and chairman’s tenure
The nomination committee is responsible for considering the
policy on tenure of the chairman of the board and planning
for the chair’s succession. In line with the board’s policy on
director tenure, which meets the recommendations of the
AIC Code principles, the chairman’s appointment may extend
beyond nine years if required to provide flexibility and an
orderly succession during the handover period. This principle
is further extended to all members of the board.
Performance review
During the year, the nomination committee met to assess
the effectiveness of the chairman, each director, the board
as a whole, and its committees. The review, facilitated by an
external party Board Forms, required the directors to
complete a short questionnaire based on the operation of
the board and its committees and the contribution of
directors and the performance of the chairman. Following
these, the chairman undertook an individual interview with
each director and summarised results of the process which
was discussed with the board. The review of the chairman
was conducted by the senior independent director and
discussed with the chairman. Reviews considered, amongst
other criteria, the board composition, board dynamics,
meetings, information, support and board committees, the
investment strategy, performance and the Company’s top
strategic challenges. The review concluded that the board
oversees the management of the Company effectively, was
collegiate whilst providing effective challenge. Each director
made a valuable contribution to the board and its
discussions and brought different qualities to the board.
The nomination committee reported to the board on each
director’s performance, the process for which is described
above, and concluded that their performance continues to
be effective, they remain committed to the Company and
have sufficient time to fulfil their duties. The board therefore
recommends the re-election of all five directors at the
forthcoming AGM to be held in due course.
Induction and training
Training for new directors is tailored to the particular
circumstances of the individual appointee. Regular briefings
are provided on changes in regulatory requirements that
could affect the Company and the directors. Directors
receive other relevant training as necessary.
MANAGEMENT ENGAGEMENT COMMITTEE
The board set up a management engagement committee in
2025, its membership consisting all of the directors and it is
chaired by Christopher Metcalfe. The committee meets on
an annual basis and at such other times as may be required.
The committee reviews the performance and contract
details, including fees, of the investment manager as well as
other key service providers. The terms of reference will be
reviewed annually and are available on request from the
company secretary and at www.heralduk.com.
During the year the management engagement committee
reviewed the performance of the Manager and the terms of
the management agreement and determined it was in the
best interests of shareholders to re appoint the Manager
, as
set out on page 40. The committee also reviewed the
performance of and contracts with its brokers, company
secretary, marketing and investor relations and other
advisers. All parties were found to be performing their duties
diligently and their ongoing appointment confirmed.
RISK MANAGEMENT AND INTERNAL CONTROLS
The directors acknowledge their responsibility for the
Company’s risk management and internal controls systems
and for reviewing their effectiveness. The systems are
designed to manage rather than eliminate the risk of failure
to achieve business objectives and can only provide
reasonable but not absolute assurance against material
misstatement or loss.
The board confirms that there is a continuing process for
identifying, evaluating and managing the significant and
emerging risks faced by the Company, in accordance with
the guidance on risk management, internal control and
related financial and business reporting, published by the
FRC. This takes into account ongoing and emerging risks,
procedures and controls and, after mitigation, identifies the
significant risks as summarised on pages 35 to 37.
The directors confirm that they have reviewed the
effectiveness of the Company’s risk management and
internal control systems and they have procedures in place
to review their effectiveness on a regular basis. No significant
weaknesses were identified in the year under review and in
the period up to and including the date of this report.
The practical measures to ensure compliance with regulation
and company law, and to provide effective and efficient
operations and investment management, have been
delegated to HIML, NSM (the company secretary) and
BNYMIL.
The audit committee and board monitor performance of the
functions performed by HIML, the company secretary and
BNYMIL through regular review. Since July 2014, when HIML
became the Company’s AIFM under the Alternative
Investment Fund Managers Directive (“AIFMD”), the audit
committee and board also monitor the controls managed by
the AIFM.
The AIFM has a risk policy covering the risks associated with
its management of the portfolio and it has in place its own
risk management procedures, which are periodically
reviewed. Risk limits are set by the AIFM and approved by the
audit committee taking into account several factors,
including investment strategy and risk appetite. The
investment policy limits are described in the Strategic Report
and are monitored at each board meeting, taking account of
appropriate sensitivity analysis.
HIML has a compliance function in accordance with the FCA
regulations. The compliance function provides the audit
committee and board with a report on its monitoring
procedures on a regular basis. Compliance monitoring by
HIML includes risk-based internal monitoring as well as
external monitoring of services that have been delegated to
third parties – principally fund accounting and company
secretarial services.
For fund accounting, monitoring includes reviewing the
monthly net asset value produced by BNYMIL versus HIML’s
own system, reviewing BNYMIL’s client accounting
compliance reports and internal audit confirmations and
reviewing KPMG
’s annual Service Organisation Control
(“SOC1”) and Centrally Managed Information Technology
Services (“CMITS”) reports on BNYMIL. The audit committee
also receives regular compliance reports from BNYMIL,
including performance against service level standards.
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Under AIFMD, the Company has appointed a depositary,
BNYMIL, whose responsibilities include cash monitoring and
safekeeping of the Company’s assets. It also acts as the
custodian. The scope of the fund accounting services
includes reconciliations to custody records. Provision of
custody services by BNYMIL is covered by a SOC1 report,
acopy of which is available to audit committee members.
As set out in the Strategic Report, the board, using the
detailed risk and control review work of the audit committee,
undertakes a robust and ongoing assessment of the
Company’s risk management and controls. This active
monitoring ensures consideration is given regularly to the
nature and extent of the risks facing the Company. Where
new risks, or changes in risk, are identified during the year,
these procedures also provide a mechanism to assess
whether further action is required to manage the changes
identified.
The board confirms that these procedures have been in
place throughout the year under review and that they
continue to be in place up to the date of approval of this
report.
ACCOUNTABILITY AND AUDIT
The respective responsibilities of the directors and the
auditor in connection with the financial statements are set
out on page 55.
DISCLOSURES REQUIRED BY UK LISTING RULE 6.6.4
The above rule requires listed companies to report certain
information in a single identifiable section of their annual
financial reports or a cross reference table indicating where
the information is set out. None of the prescribed
information is applicable to the Company for the year under
review.
RELATIONS WITH SHAREHOLDERS
The board places great importance on communication with
shareholders. The Company’s Manager meets with
shareholders and reports to the board. The chairman is also
available to meet shareholders and undertook several such
meetings during the year, both with and without the
Manager. Shareholders wishing to communicate with the
chairman or any other director may do so by writing to the
company secretary at the registered office of the Company
which is shown on page 81.
Information is provided to all shareholders via the annual and
half -yearly financial statements and also by the publication of
daily NAVs and monthly factsheets.
The Company’s AGM provides a forum for communication
with all shareholders. The level of proxies lodged for each
resolution is announced at the meeting and is published on
the Manager’s website, www.heralduk.com, subsequent to
the meeting. Shareholders and potential investors may obtain
up-to-date information on the Company from the Manager’s
website.
In line with governance recommendations, if 20% or more of
votes cast are against any resolution, the Company would
announce what action it intended to take to consult
shareholders views and would provide a summary of the
outcome and actions it intended to take within six months of
the date at which the vote was held. The board confirms that
at the AGM held on 24 March 2025, more than 20% of votes
were cast against the board recommendations seeking the
re-election of directors and continuation of the Company.
An activist shareholder represented the vast majority of the
votes cast against the board’s recommendations. The board
has attempted to engage with them in order to understand
their reasons for voting against the resolutions which could,
for example, have left the Company with no directors. This
engagement has met with limited success.
AGM
At the Company’s AGM on 24 March 2025, the Company
received significant votes against resolutions 1-7 (to adopt
the annual report; to approve the remuneration report; and
to re-elect directors), 10-12 (to issue shares; to approve the
continuation vote; to issue share on a non pre-emptive basis)
and 14 (to allow a general meeting to be called on not less
than 14 clear days notice). All resolutions were passed except
for resolutions 12 (to issue share on a non pre-emptive basis)
and 14 which, being special resolutions requiring 75% of
votes cast to be in favour, did not pass. Given nearly all the
votes cast against were cast by, or on behalf of, Saba, the
Chairman and the Company’s corporate adviser, JPMorgan
Cazenove, have engaged with Saba to, amongst other things,
understand the rationale for the votes against. However,
Saba’s intentions remain unclear.
Feedback received from other shareholders during the year,
and as evidenced by non-Saba attributable votes at both the
requisitioned general meeting and AGM in the first quarter
2025, continued to be supportive of the current board, the
investment manager and Company’s investment objective.
The Chairman’s Statement sets out how the board –
following lengthy discussions with major shareholders,
including Saba and in agreement with the Manager – have
attempted to reconcile the short term and long-term
shareholders’ objectives, beginning with the proposed Tender
Offer announcement on 9 January 2026. Further details can
also be found in the circular sent to shareholders on
12January 2026, a copy of which is available at
www.heralduk.com. Subsequent events are set out in the
Short Summary of Recent Events which immediately follows
the Chairman’s Statement.
On behalf of the board
ANDREW JOY
CHAIRMAN
20 February 2026
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AUDIT COMMITTEE REPORT
AUDIT COMMITTEE
The audit committee is made up of all the independent
non-executive directors, with the exception of the chairman,
although he joins by invitation. The committee believes that
it is in the best interests of the Company for the chairman of
the board to attend. The committee is chaired by Stephanie
Eastment and the committee meets at least twice a year.
The committee considers that at least one of its members
has recent and relevant financial experience and that the
committee as a whole has competence relevant to the
sector in which the Company operates. Its authority and
duties are defined within its written terms of reference which
are available on request from the company secretary and on
the Manager’s website: www.heralduk.com.
ROLE AND RESPONSIBILITIES
The committee’s responsibilities include:
— monitoring and reviewing the integrity of the half-yearly
and annual financial statements and any formal
announcements relating to the Company’s financial
performance including: ensuring compliance with
statutory and listing requirements; appropriateness of
accounting policies and any financial judgements and key
assumptions;
— at the request of the board, considering whether the
annual report, when taken as a whole, is fair, balanced
and understandable and provides the information
necessary for shareholders to assess the Company’s
position, performance, business model and strategy;
— reviewing the adequacy and effectiveness of internal
control and risk management systems and considering
the key risks and emerging risks facing the Company;
— making recommendations to the board in relation to the
appointment of the external auditor and approving the
remuneration and terms of its engagement;
— overseeing and managing the audit tender and selection
processes and making recommendations to the board
about the appointment, reappointment and removal of
the external auditor;
— developing and implementing policy on the engagement
of the external auditor to supply non-audit services;
— management of the relationship with the external auditor
including: the scope, nature and planning of the audit;
discussion of matters of audit focus; evaluation of
external auditor’s results; and review and monitoring the
independence, objectivity and effectiveness of the
external auditor taking into consideration relevant UK
professional and regulatory requirements;
— ensuring compliance with the FRC’s Audit Committees
and the External Audit: Minimum Standard;
— reviewing whistleblowing arrangements in place within
HIML; and
— considering annually whether there is a need for the
Company to have its own internal audit function.
COMMITTEE ACTIVITY FOR THE YEAR
The committee fulfilled all the above roles and
responsibilities for the year under review, with the exception
of audit tendering as this was undertaken in 2019.
The Company’s external auditor is PricewaterhouseCoopers
LLP (“PwC”). As part of the year end audit process, the
committee reviewed the audit plan at an early stage. This
review covered the scope of the audit, materiality, ensuring
that the auditor’s objectives would meet the committee’s
expectations and the key audit and accounting matters to be
considered. During the audit the committee chair liaised with
both the company secretary and PwC to receive progress
updates and reviewed the auditor’s draft audit results report
prior to the year end committee meeting at which the annual
financial report was reviewed.
RISK MANAGEMENT AND INTERNAL CONTROL
The extensive array of internal controls adopted by the
Company are set out in the Corporate Governance Report.
The board, as a whole, is responsible for the effectiveness of
internal control mechanisms but it is informed by more
specific work carried out by the audit committee.
SIGNIFICANT ISSUES RELATING TO THE 2025 FINANCIAL
STATEMENTS
The UK Corporate Governance Code requires the committee
to describe any significant issues considered in relation to the
financial statements and how those issues were addressed.
Two matters of risk of particular focus at the statement of
financial position date are the risks that investments might
not have been correctly valued or beneficially owned. The
committee receives bi-annual reports from the depositary
confirming the valuation, existence and ownership of the
Company’s investments as well as the year end auditor’s
report on these items. No issues were discovered.
As part of the committee’s review of the annual report and
financial statements, it considered the appropriateness of
accounting policies. This includes the appropriateness of the
going concern basis for the preparation of the financial
statements (which is set out in detail on page 50), together
with the disclosures in respect of this assessment.
INTERNAL AUDIT
The audit committee carried out its annual review of the
need for an internal audit function. The committee continues
to believe that the compliance and internal control systems
in place within the Manager and the administrator provide
sufficient assurance that a sound system of internal control,
which safeguards shareholders’ investment and the
Company’s assets, is maintained. An internal audit function,
specific to the Company, is therefore not considered
necessary.
FINANCIAL REPORTING COUNCIL (“FRC”) REVIEW OF
ANNUAL REPORT 2024
In 2025, the FRC reviewed the Company’s 2024 Annual
Report. It was pleasing to note that the FRC letter to the
Chairman of the board setting out the results of its review
confirmed that it had no matters to raise in respect of
Company’s compliance with corporate reporting
requirements. The letter went on to note that it “provides no
assurance that the annual report and accounts are correct in
all material respects; the FRC’s role is not to verify the
information provided to it but to consider compliance with
reporting requirements.”
This FRC review was the second one undertaken of the
Company’s financial reporting to shareholders of recent date,
both of which confirmed there were no matters to raise.
These results reflect the hard work of the audit committee,
the board, and the Company’s Manager and other
professional service providers.
EXTERNAL AUDITOR
The committee reviewed the independence and objectivity
of the auditor, its performance and effectiveness by meeting
with the audit partner to discuss the year’s audit. Part of that
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process required the auditor to give the committee an
assessment of how the audit team identified and managed
threats to its independence. The committee received
confirmation from the auditor that it has complied with the
relevant UK professional and regulatory requirements on
independence. It also took into account the findings in the
most recent FRC audit quality inspection report on PwC, and
discussed its findings with the audit partner. The committee
does not believe that there has been any impairment to the
auditor’s independence.
This year’s audit was the seventh performed by PwC since it
was appointed on 21 October 2019 following an audit tender
process and second by the audit partner, Jeremy Jensen. As
part of the year end committee meeting, the committee
sought the views of the Manager and administrator on the
effectiveness and performance of the audit team. No issues
were raised. As set out above, the committee reviewed the
performance and effectiveness, independence and
objectivity of the auditor for the year under review. This also
included consideration of the experience of the audit partner
and staff, the quality of service, review of the audit plan,
execution and reporting, and additional meetings with the
auditor as part of the annual and half-yearly reporting
process. All results were satisfactory. Accordingly, the
committee has recommended that PwC be reappointed at
the forthcoming AGM.
PwC have indicated their willingness to continue in office
and resolutions proposing the reappointment of PwC and
authorising the committee to determine their remuneration
for the ensuing year will be proposed at the forthcoming
AGM.
The next competitive audit tender will occur prior to the
financial year ending 31 December 2029 in line with legal
requirements.
NON-AUDIT SERVICES
The committee’s policy is that non-audit work should be
limited to those matters where the external auditor is most
appropriately placed to carry out the work, unless there is
aconflict of interest. All non-audit services must be approved
in advance. PwC did not provide any non-audit services to
the Company in this or the previous accounting year.
STEPHANIE EASTMENT
AUDIT COMMITTEE CHAIR
20 February 2026
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DIRECTORS’ REPORT
have full visibility. On the basis that both these options raise
inherent uncertainties that could potentially call into
question the Company’s ability to continue to be a going
concern for at least 12 months from the date of approval of
these financial statements, the board concluded that there is
a material uncertainty that casts significant doubt about the
Company’s ability to continue as a going concern, although
it remained appropriate to prepare the financial statements
on a going concern basis. The financial statements do not
include adjustments that would be necessary if the Company
was unable to continue as a going concern.
CONFLICTS OF INTEREST
The Company maintains a register of directors’ interests
which is reviewed at each board or committee meeting. The
board is able to authorise conflicts if appropriate.
Directors are expected to notify the board if they become
aware of any actual or potential conflict of interest for
themselves or their connected parties, whether on an
ongoing basis or in relation to a particular transaction.
Having considered the lists of potential conflicts there were
no situations which gave rise to a direct or indirect interest of
a director which conflicted with the interests of the
Company.
The board have recorded within its conflicts register that
Priya Guha is a director of an entity in which the Company is
invested and have concluded that as the management of the
investment portfolio is delegated to HIML, there is no conflict
arising from this appointment. Should a decision need to be
taken by the board in relation to this investment, the relevant
director would abstain themself from any such discussion
and decision.
BRIBERY ACT 2010 AND CRIMINAL FINANCES ACT 2017
The board has a zero tolerance policy towards bribery and
the criminal facilitation of tax evasion. It is committed to
carrying out business fairly, honestly and openly.
The Manager, administrator and company secretary also
adopt a zero tolerance approach and have policies and
procedures in place to prevent both bribery and the
facilitation of tax evasion.
GREENHOUSE GAS EMISSIONS
The Company has no employees, physical assets, property or
operations of its own, does not provide goods or services
and does not have its own customers. It follows that the
Company has little to no direct environmental impact. In
consequence, the Company has limited greenhouse gas
emissions to report from its operations aside from travel to
board meetings, nor does it have responsibility for any other
sources of emissions under the Companies Act 2006
(Strategic Report and Directors’ Reports) Regulations 2013.
The Company consumed less than 40,000 kWh of energy
during the year.
DIRECTOR INDEMNIFICATION AND INSURANCE
The Company has entered into deeds of indemnity in favour
of each of the directors. The deeds cover any liabilities that
may arise to a third party, other than the Company, for
negligence, default or breach of trust or duty. The directors
are not indemnified in respect of liabilities to the Company,
any regulatory or criminal fines, or any costs incurred in
connection with criminal proceedings in which the director is
convicted or civil proceedings brought by the Company in
which judgement is given against him. In addition, the
The directors present their Directors’ Report for the year
ended 31 December 2025. The Strategic Report and the
Corporate Governance Report on pages 34 to 47 form a part
of the Directors’ Report.
RESULTS AND DIVIDEND
The net asset value (“NAV”) of the Company as at
31December 2025 was 2,700.5p per ordinary share (2024 –
2,488.2p). This represented an increase of 8.5% during the
year, compared to an increase in the comparative total
return indices of 11.8% for the Deutsche Numis Smaller
Companies plus AIM (ex. investment companies) Index and
an decrease of 0.3% for the Russell 2000® Technology
Index (small cap) (in sterling terms). The discount at year end
was 10.9% (2024 – 2.3%).
The directors do not recommend a dividend for the year
ended 31 December 2025 (2024 – nil) as explained in the
dividend section on page 35.
DIRECTORS
The directors of the Company who were in office during the
year and up to the date of signing the financial statements
are listed on page 43.
GOING CONCERN
The directors have undertaken a review of the Company’s
ability to adopt the going concern basis of accounting,
which included consideration of the financial position of the
Company, its cashflows and its liquidity position. The review
included consideration of any material uncertainties and
events that might cast significant doubt upon the Company’s
ability to continue as a going concern, including ongoing
global tensions, such as global trade tariffs and armed
conflicts, which continue to create market uncertainty and
exacerbate inflationary pressures. The Company’s principal
risks are market-related and the current market conditions
have demonstrated the resilience of the Company and its
investment objective and policy. An explanation of the
market, liquidity and credit risks and how they are managed
is contained in note 17 to the financial statements. The
Company’s assets, the majority of which are investments in
quoted securities, exceed its liabilities significantly. All
borrowings require the prior approval of the board. The
Company had no borrowings as at 31 December 2025. In
accordance with the Company’s articles of association,
shareholders have the right to vote on the continuation of
the company as an investment trust every three years and a
resolution to that effect was last approved at the AGM in
March 2025. The next continuation vote will be held at the
AGM to be held in 2028.
At the year end, and at the date of signing of the financial
statements, the Company has in Saba a significant minority
shareholder. As a result of that holding and following
discussion with major shareholders, including Saba, and as
explained in more detail in the Chairman’s Statement on
pages 8 and 9, on 9 January 2026 the Company launched a
Tender Offer. The Tender Offer was subsequently cancelled
as Saba voted against the tender and the board is currently in
discussions with Saba in an effort to reach a mutually
acceptable outcome for a new tender offer in which
shareholders would be able to tender up to 100% of their
holding. If these discussions do not lead to a mutually
acceptable outcome, it is likely that the board would
proceed with the Backstop Tender, requiring only a simple
majority for approval whereby Saba could gain a controlling
stake and then make changes to the Company’s business
and/or operating model, over which the board does not
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indemnity does not apply to any liability to the extent that it is
recovered from another person.
The Company maintains Directors’ and Officers’ liability
insurance.
PRINCIPAL RISKS AND UNCERTAINTIES
These are set out as part of the Strategic Report.
SHARE CAPITAL
Details of the Company’s share capital and changes thereto
are disclosed in the Strategic Report on page 34 and note12
of the financial statements.
ARTICLES OF ASSOCIATION
Any amendments to the Company’s Articles must be made
by special resolution at a general or annual general meeting
of the Company.
INTERESTS IN THE COMPANY’S SHARES
At year end the Company was aware of the following
substantial interests in the voting rights of the Company.
% of issued share
capital as notified
to the Company
Saba Capital Management, L.P. 30.7%*
Rathbone Investment Management Limited 13.4%**
Bank of America Corporation 13.1%*
+
Interactive Investor Services Limited 5.1%**
Hargreaves Lansdown Stockbrokers 4.5%**
Wells Fargo Bank NA 4.2%**
+
Charles Stanley & Co 3.2%**
* TR1 disclosure
** Shareholder register
+
The board believes that these holdings may include certain of Saba’s
interests already disclosed above (pursuant to nominee or swap
arrangements).
At the latest practicable date prior to the publication of this
report, the Company has not been notified of any changes to
the above interests.
REGULATORY COMPLIANCE
THE ALTERNATIVE INVESTMENT FUND MANAGERS
(“AIFM”) DIRECTIVE
The AIFM is required to provide portfolio management and
risk management. In accordance with the AIFM’s agreement
it is also required to provide administration, accounting and
company secretarial services to the Company. The Company
has appointed HIML as its AIFM, to undertake these functions
on its behalf.
AIFMs are obliged to publish certain information for investors
and prospective investors, which may be found either in this
annual report or on the Company’s website. Any information
on remuneration not already disclosed in the remuneration
report will be provided to investors on request.
The AIFMD requires an annual disclosure of ‘leverage’. On
a‘gross’ basis, this is 0.97 against a maximum of 2.00
(2024 –
0.99:2.00) and on a ‘commitment’ basis, 1.00 against a
maximum of 2.00 (2024 – 1.00: 2.00).
THE MODERN SLAVERY ACT 2015
The Company falls outside the scope of the Modern Slavery
Act and is therefore not required to make a slavery and
human trafficking statement. Nevertheless, it requires all of
its suppliers in the scope of the Modern Slavery Act to
confirm compliance.
PAYMENT TO SUPPLIERS
The Company is a signatory to the Prompt Payment Code,
which enshrines a 30-day payment term as a norm.
DISCLOSURE OF INFORMATION TO THE AUDITOR
The directors confirm that so far as each of them is aware,
there is no relevant audit information of which the
Company’s auditor is unaware and the directors have taken
all the steps that they ought to have taken as directors in
order to make themselves aware of any relevant audit
information and to establish that the Company’s auditor is
aware of that information.
INDEPENDENT AUDITOR
The independent auditor, PricewaterhouseCoopers LLP, is
willing to continue in office. Resolutions proposing the
reappointment of PricewaterhouseCoopers LLP and
authorising the Audit Committee to determine its
remuneration for the ensuing year will be proposed at the
AGM.
POST BALANCE SHEET EVENTS
The Chairman’s Statement sets out the position of the
Company given the ongoing large shareholding of Saba and
the non-alignment of short term and long-term
shareholders’ objectives. The board – following lengthy
discussions with major shareholders including Saba and in
agreement with the Manager – have attempted to address
the situation, beginning with the proposed Tender Offer
announcement on 9 January 2026. Further details can also
be found in the circular sent to shareholders on 12 January
2026, a copy of which is available at www.heralduk.com.
Subsequent events are set out in the Short Summary of
Recent Events which immediately follows the Chairman’s
Statement.
AGM
It is anticipated that the Company will convene its AGM as
soon as practicable. A separate circular, detailing the Notice
of AGM and voting instructions, will be sent to shareholders
in due course. It is intended that the Manager will make a
presentation reviewing the year which will be posted on the
Manager’s website for those unable to attend.
On behalf of the board
ANDREW JOY
CHAIRMAN
20 February 2026
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DIRECTORS’ REMUNERATION REPORT
1. CHAIRMAN’S ANNUAL STATEMENT
Dear Shareholder
I present below the Company’s remuneration report for the year ended 31 December 2025.
Our remuneration policy (see section 2 below) was approved by shareholders at the 2023 AGM. The policy is set out below.
Inaccordance with statute, the remuneration policy must be put to shareholders for approval every three years and the board
must only operate in accordance with the approved policy during the three-year cycle, unless shareholder approval is sought
to amend the policy. Accordingly, the remuneration policy will be put to shareholders at the forthcoming AGM.
I confirm that the board has complied with the Company’s remuneration policy during the year ended 31 December 2025. The
current annual fee rate paid to directors, and the amounts to be used to determine the maximum total increase allowable
under the policy on directors’ fees, are detailed in the table below:
Fee Rate from Fee Rate from Annualised Percentage
1 January 2026
1
1 July 2024 Increase for the year
Role £ £ %
Chairman 48,000 45,000 4.4%
Audit Committee Chair 39,600 36,500 5.6%
Management Engagement Committee Chair 36,300 33,500
2
n/a
Senior Independent Director 36,300 33,500 5.5%
Director 33,000 30,500 5.4%
1 The fee increase for the year was delayed to align the annual increase with the Company’s year end.
2 The new Management Engagement Committee was set up on 20 February 2025 and the chair fee rate for this was set at that date.
In reviewing the level of fees in October 2025 the board took into consideration market data on the level of fees paid to
investment trust non-executive directors, utilising external third-party independent benchmarking reports, with particular
focus on other trusts within its peer group and the global and technology sectors. Following this review, it was agreed that it
was appropriate to increase fees for all directors, to bring them more into line with the median level of fees paid. In addition,
the Committee aligned the timing of the annual increase from mid year to the Company's year end, albeit that this delayed
increases by six months. When considering directors’ fees, the board did not appoint an external adviser during the year.
SCOPE AND RESPONSIBILITY
As the Company has no employees and no executive directors, the policy relates only to the non-executive directors.
2. COMPANY’S REMUNERATION POLICY
The policy is that the remuneration of directors should be set at a reasonable level that is commensurate with the duties and
responsibilities of the role and consistent with the requirement to attract and retain directors of appropriate quality and
experience. It should also reflect the experience of the board as a whole and be fair and comparable to that of other
investment trusts that are similar in size and complexity. The policy will continue in force (subject to shareholder approval)
until the forthcoming AGM. The board considers, where raised, shareholder views on directors’ fees.
Directors are entitled to be reimbursed for any reasonable expenses properly incurred in the performance of their duties. The
board may amend the levels of remuneration paid to individual directors within the parameters of this policy.
Component Commentary
Basic fee arrangement
Benefits None
Pension arrangements
None
Bonus arrangements None
Fees paid to directors are determined within an aggregate limit set out in the Company’s articles of association which
currently stands at £250,000 per annum.
There is no separate remuneration committee and the board as a whole considers changes to directors’ fees from time to time.
The company secretary provides advice and comparative information when the board considers the level of directors’ fees.
Under the terms of the directors’ appointment letters, there is no notice period and no provision for compensation upon early
termination of appointment.
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3. ANNUAL DIRECTORS’ REMUNERATION REPORT FOR THE YEARS ENDED 31 DECEMBER (AUDITED)
The law requires the Company’s auditor to audit certain of the disclosures provided. Where disclosures have been audited,
they are indicated as such, and include this section. The independent auditor’s opinion is included in their report on pages 56
to 61.
The table below sets out the single total figure of remuneration for each director who served during the year end and the
preceding year, and the percentage change for basic fees for the five years to 31 December 2025.
2025 2024 2025 2024 2023 2022 2021
Taxable Taxable Annual percentage
Fees expenses Total Fees expenses Total change of fees
Notes £ £ £ £ £ £ % % % % %
Andrew Joy 1 45,000 – 45,000 43,950 – 43,950 2.4 14.8 Note B Note A n/a
Stephanie Eastment 36,500 521 37,021 35,575 113 35,688 2.6 5.2 3.9 4.8 8.0
Priya Guha 2 30,500 – 30,500 29,950 160 30,110 1.8 Note B Note A n/a n/a
Henrietta Marsh 3 32,856 – 32,856 29,950 – 29,950 9.7 4.4 5.8 5.9 4.6
Christopher Metcalfe 4 32,691 – 32,691 20,714 – 20,714 Note B Note A n/a n/a n/a
James Will 5 7,786 1,539 9,325 32,920 1,141 34,061 Note A 4.3 4.3 10.6 11.7
Karl Sternberg 6 – – – 9,202 – 9,202 n/a Note A 5.8 5.9 4.6
Total 185,333 2,060 187,393 202,261 1,414 203,675
Note A: In the year of appointment or retirement/resignation, a meaningful percentage change figure cannot be calculated.
Note B: In the year following appointment, the direct per cent. figure is overstated because the denominator figure does not reflect a full year in office.
Notes:
1. Andrew Joy was appointed 1 October 2022. He became chairman on 18 April 2023 and this significantly increased his percentage change in 202
4.
2. Priya Guha was appointed on 13 December 2023.
3. The 9.7% increase in 2025 for Henrietta Marsh arose from her appointment as SID on 24 March 2025.
4. Christopher Metcalfe was appointed 24 April 2024 and appointed Management Engagement Committee chair on 20 February 2025.
5. James Will retired at the conclusion of the AGM on 24 March 2025.
6. Karl Sternberg retired at the conclusion of the AGM on 23 April 2024.
The table above omits other columns set out in the relevant regulations as the Company does not make payments of other
types, such as pension related benefits or performance related pay. Board meetings are normally held at the Company’s
registered office. Directors are entitled to claim travel expenses and other reasonable expenses in carrying out their duties as
Directors of the Company. The Company has entered into a PAYE settlement agreement with HMRC under which the grossed
up expenses detailed above are accounted for directly with HMRC.
DIRECTORS’ INTERESTS (AUDITED)
There is no requirement for directors to own the Company’s shares. Directors’ shareholdings and interests (beneficial unless
stated) at the year end were as follows:
Interest as at 31 December 2025 2024
Andrew Joy 6,000 6,000
Stephanie Eastment* 3,200 3,200
Henrietta Marsh 1,000 1,000
Christopher Metcalfe 5,220 5,220
Priya Guha – –
* 1,500 held non-beneficially; shares held by connected person.
There have been no changes to any of the directors’ share interests in the period from 1 January 2026 to the date of this report.
COMPANY PERFORMANCE
The graph on the following page compares the total return (assuming all dividends are reinvested) to ordinary shareholders
compared to the total shareholder return of the Deutsche Numis Smaller Companies plus AIM (ex. investment companies)
Index and the Russell 2000® Technology Index (small cap) (in sterling terms). Although the Company considers these indices
to provide reasonable bases for measuring the Company’s performance, the portfolio is not modelled on them and outcomes
may diverge widely.
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Source: LSEG Data & Analytics.
* Total return (assuming all dividends are reinvested).
RELATIVE SPEND ON FEES
The following table shows the total amount spent on payments to directors with a comparator to last year, along with total
distributions to shareholders by way of dividend or (where applicable) share buy-back or other distributions. There are no
other significant distributions, payments or other uses of the Company’s profit or cash flow that the board feels are relevant to
assist the understanding of the relating spend on fees.
2025 2024
£’000 £’000
Total spend – directors’ fees 185 202
Total distributed to shareholders – dividends – –
– share buybacks 58,659 127,451
VOTING ON REMUNERATION MATTERS
At the AGM on 24 March 2025, the resolution to receive and approve the directors’ remuneration report for the year ended
31December 2024 received the following votes: for – 65.1% (22,486,272 votes); against – 34.9% (12,039,188 votes).
40,881votes were withheld. As detailed in the corporate governance report, nearly all the votes cast against were cast by, or
on behalf of, Saba. The Chairman and the Company’s corporate adviser, JPMorgan Cazenove, have engaged with Saba to,
amongst other things, understand the rationale for the votes against.
The remuneration policy was last approved by shareholders on 18 April 2023 with 99.9% of votes in favour (31,668,834 votes);
0.1% votes against (23,373 votes). 7,570 votes were withheld.
The directors’ annual remuneration report set out above (section 3) was approved by the board of directors on 20 February
2026 and signed on its behalf by
ANDREW JOY
CHAIRMAN
20 February 2026
HERALD’S SHARE PRICE AND COMPARATIVE INDICES*
(FIGURES HAVE BEEN REBASED TO 100 AT 31 DECEMBER 2015)
Share Price*
Deutsche Numis Smaller Companies plus AIM (ex. investment companies) Index*
Russell 2000® Technology Index (small cap) (in sterling terms)*
100
150
200
250
300
350
400
20252024202320222021202020192018201720162015
DIRECTORS’ REMUNERATION REPORT CONTINUED
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Each of the directors, whose names and functions are listed
on page 43 confirm that, to the best of their knowledge:
— the financial statements, which have been prepared in
accordance with applicable law and United Kingdom
Accounting Standards (United Kingdom Generally
Accepted Accounting Practice), give a true and fair view
of the assets, liabilities, financial position and loss of the
Company;
— the annual report and financial statements includes a fair
review of the development and performance of the
business and the position of the Company, together with
a description of the principal risks and uncertainties that it
faces and the Directors’ Report contains those matters
required to be disclosed by applicable law; and
— they consider that the annual report and financial
statements, taken as a whole, is fair, balanced and
understandable and provides the information necessary
for shareholders to assess the Company’s position,
performance, business model and strategy.
On behalf of the board
ANDREW JOY
CHAIRMAN
20 FEBRUARY 2026
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 elected to prepare the financial statements in
accordance with applicable law and United Kingdom
Accounting Standards (United Kingdom Generally Accepted
Accounting Practice), including FRS 102 “The Financial
Reporting Standard applicable in the UK and Republic of
Ireland”. Under company law the directors must not approve
the financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the
Company and of the profit or loss of the Company for that
period. In preparing these financial statements, the directors
are required to:
— select suitable accounting policies and then apply them
consistently;
— make judgements and accounting estimates that are
reasonable and prudent;
— state whether applicable UK Accounting Standards have
been followed, subject to any material departures
disclosed and explained in the financial statements; and
— prepare the financial statements on the going concern
basis, unless it is inappropriate to assume that the
Company will continue in business.
The directors are responsible for the keeping of 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 have delegated responsibility to the Manager
for the maintenance and integrity of the Company’s page of
the Manager’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
The work carried out by the auditor does not involve any
consideration of these matters and, accordingly, the auditor
accepts no responsibility for any changes that may have
occurred to the financial statements since they were initially
presented on the website.
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
IN RESPECT OF THE FINANCIAL STATEMENTS
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REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
OPINION
In our opinion, Herald Investment Trust plc’s financial statements:
— give a true and fair view of the state of the company’s affairs as at 31 December 2025 and of its profit and cash flows
for the year then ended;
— have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice
(UnitedKingdom Accounting Standards, including FRS 102 “The Financial Reporting Standard applicable in the
UKand Republic of Ireland”, and applicable law); and
— have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual report & financial statements (the “Annual
Report”), which comprise:
— the Statement of Financial Position as at 31 December 2025;
— the Statement of Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows for the year
then ended; and
— the notes to the financial statements, which include a description of the significant accounting policies.
Our opinion is consistent with our reporting to the Audit Committee.
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.
Our responsibilities under ISAs (UK) are further described in the Auditors’ 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 remained independent of the company in accordance with the ethical requirements that are relevant to our audit of
the financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest
entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard
were not provided.
We have provided no non-audit services to the company in the period under audit.
MATERIAL UNCERTAINTY RELATED TO GOING CONCERN
In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the
disclosure made in note 1(A) Accounting Convention to the financial statements concerning the company’s ability to
continue as a going concern. At the year end, and at the date of signing of the financial statements, the Company has
in Saba a significant minority shareholder. As a result of that holding and following discussion with major shareholders,
including Saba, the Company launched a Tender Offer. The Tender Offer was subsequently cancelled as Saba voted
against the tender and the board is currently in discussions with Saba in an effort to reach a mutually acceptable
outcome for a new tender offer in which shareholders would be able to tender up to 100% of their holding. If these
discussions do not lead to a mutually acceptable outcome, it is likely that the board would proceed with the Backstop
Tender, requiring only a simple majority for approval whereby Saba could gain a controlling stake and then make
changes to the Company’s business and/or operating model, over which the board does not have full visibility. These
conditions, along with the other matters explained in note 1(A) Accounting Convention to the financial statements,
indicate the existence of a material uncertainty which may cast significant doubt about the Company’s ability to
continue as a going concern. The financial statements do not include the adjustments that would result if the Company
were unable to continue as a going concern.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the
Company’s ability to continue to adopt the going concern basis of
accounting included:
— evaluating the Directors’ assessment of potential operational impacts, considering their consistency with other
available information and our understanding of the business;
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF HERALD INVESTMENT TRUST PLC
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— reviewing the Directors’ assessment of the Company’s financial position in the context of its ability to meet future
expected operating expenses, their assessment of liquidity as well as their review of the operational resilience of the
Company and oversight of key third-party service providers;
— assessing the discount at which the Company’s share price trades compared to the net asset value per share; and
— assessing the implication of significant reductions in net assets as a result of market performance on the ongoing
ability of the Company to operate.
In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, other than the
material uncertainty identified in note 1(A) Accounting Convention to the financial statements, 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, or in respect of the directors’
identification in the financial statements of any other material uncertainties to the Company’s ability to continue to do
so over a period of at least 12 months from the date of approval of the financial statements.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.
OUR AUDIT APPROACH
CONTEXT
The Company is a standalone Investment Trust Company and engages Herald Investment Management Limited (the
“AIFM”) to manage its assets.
OVERVIEW
Audit scope
— We conducted our audit of the financial statements using information fr
om the AIFM, NSM Funds (UK) Limited (the
“Company Secretary”), and The Bank of New York Mellon(International) Limited (the “Depositary, Custodian and
Administrator”) with whom the AIFM has engaged to provide certain administrative functions.
— We tailored the scope of our audit taking into account the types of investments within the Company, the
involvement of the AIFM referred to above, and the industry in which the Company operates.
Key audit matters
— Material uncertainty related to going concern.
— Valuation and existence of investments.
— Income from investments.
Materiality
— Overall materiality: £12,924,000 (2024 – £12,526,000) based on approximately 1% of net assets.
— Performance materiality: £9,693,000 (2024 – £9,394,000).
THE SCOPE OF OUR AUDIT
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the
financial statements.
KEY AUDIT MATTERS
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the 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) identified by the auditors, including those which had the greatest effect on: the overall audit
strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any
comments we make on the results of our procedures thereon, were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
In addition to going concern, described in the Material Uncertainty Related To Going
Concern section above, we
determined the matters described below to be the key audit matters to be communicated in our report. This is not a
complete list of all risks identified by our audit.
Material uncertainty related to going concern is a new key audit matter this year. Ability to continue as a going concern
(Continuation Vote), which was a key audit matter last year, is no longer included because of the Company held its
continuation vote in 2025, which was passed. The next continuation vote is scheduled for 2028. Otherwise, the key audit
matters below are consistent with last year.
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INDEPENDENT AUDITOR’S REPORT CONTINUED
TO THE MEMBERS OF HERALD INVESTMENT TRUST PLC
KEY AUDIT MATTER HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER
HOW WE TAILORED THE AUDIT SCOPE
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the
financial statements as a whole, taking into account the structure of the company, the accounting processes and
controls, and the industry in which it operates.
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the
financial statements. In particular, we looked at where the Directors made subjective judgements, for example in
respect of significant accounting estimates that involved making assumptions and considering future events that are
inherently uncertain.
THE IMPACT OF CLIMATE RISK ON OUR AUDIT
In planning our audit, we made enquiries of the Directors and the Investment Manager to understand the extent of the
potential impact of climate change risk on the Company’s financial statements. The Directors and Investment Manager
concluded that the impact on the measurement and disclosures within the financial statements is not material because
Valuation and existence of
investments
Refer to Audit Committee Report,
note 1 Accounting Policies (C)
Investments and note 9 to the
Financial Statements.
The investment portfolio at
31December 2025 comprised of
quoted investments of £1,151.8m
and £16.6m of unquoted
investments. We focused on the
valuation and existence of
investments because investments
represent the principal element of
the net asset value as disclosed in
the Statement of Financial Position
in the financial statements.
We tested the valuation of all quoted investments by agreeing the prices used
in the valuation to independent third-party sources.
For a sample of unquoted investments, we assessed that management’s
methodology for determining the fair value of the investments is consistent
with the International Private Equity and Venture Capital Guidelines ‘IPEV’,
agreed the inputs into the valuation to relevant supporting documentation
(such as signed financial statements of the issuer, publicly available investor
reports and the instrument terms) and re-performed calculations to confirm
their arithmetical accuracy.
We tested the existence of all investments by agreeing the holdings of all
investments to an independent confirmation from the Depositary, The Bank
of New York Mellon (International) Limited as at 31 December 2025.
We assessed the accounting policy for income recognition for compliance
with accounting standards and the AIC SORP and performed testing to check
that income had been accounted for in accordance with this stated
accounting policy.
The gains and losses on investments held at fair value comprise realised and
unrealised gains and losses. For unrealised gains and losses, we tested the
valuation of the portfolio at the year-end (see Valuation and existence of
investments key audit matter), together with testing the reconciliation of
opening and closing investments and agreeing the year end holdings to an
independent confirmation. For realised gains and losses, we tested a sample
of disposal proceeds by agreeing the proceeds to bank statements and we
re-performed the calculation of a sample of realised gains and losses.
We tested the accuracy of dividend receipts by agreeing the dividend rates
from all quoted investments to independent third party sources.
To test for completeness, we tested, for all quoted investment holdings in the
portfolio, that all dividends declared in the market for investment holdings
had been recorded.
We tested occurrence of dividend income, by testing that all dividends from
quoted investments recorded in the year had been declared in the market by
investment holdings, and we traced a sample of dividends received to bank
statements.
We tested the allocation and presentation of dividend income for a sample
ofspecial dividends, between income and capital by agreeing treatments to
third party sources.
Income from investments
Refer to note 1 Accounting Policies
(E) Income, note 2 and note 9 to the
Financial Statements.
We focused on dividend income
recognition as incomplete or
inaccurate income could have
amaterial impact on the Company’s
net asset value.
We also focused on the accounting
policy for income recognition and its
presentation in the Statement of
Comprehensive Income for
compliance with the requirements of
The Association of Investment
Companies Statement of
Recommended Practice (the “AIC
SORP”) as incorrect application
could indicate a misstatement in
income recognition.
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the Company’s investment portfolio is approximately 98.6% made up of level 1 quoted securities which are valued at
fair value based on market prices along with a remaining unquoted portfolio. We found this to be consistent with our
understanding of the Company’s investment activities.
MATERIALITY
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the
nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and in
evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall company materiality £12,924,000 (2024 – £12,526,000).
How we determined it Approximately 1% of net assets.
Rationale for benchmark applied
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected
and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining
the scope of our audit and the nature and extent of our testing of account balances, classes of transactions and
disclosures, for example in determining sample sizes. Our performance materiality was 75% (2024 – 75%) of overall
materiality, amounting to £9,693,000 (2024 – £9,394,000) for the company financial statements.
In determining the performance materiality, we considered a number of factors - the history of misstatements, risk
assessment and aggregation risk and the effectiveness of controls – and concluded that an amount at the upper end of
our normal range was appropriate.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above
£646,000 (2024 – £626,000) as well as misstatements below that amount that, in our view, warranted reporting for
qualitative reasons.
REPORTING ON OTHER INFORMATION
The other information comprises all of the information in the Annual Report other than the financial statements and our
auditors’ report thereon. The directors are responsible for the other information. Our opinion on the financial
statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the
extent otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, 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 audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency
or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement
of the financial statements or a material misstatement of the other information. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we ar
e required to report that
fact. We have nothing to report based on these responsibilities.
With respect to the Strategic Report and Directors’ Report, we also considered whether the disclosures required by the
UK Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain
opinions and matters as described below.
STRATEGIC REPORT AND DIRECTORS’ REPORT
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report
and Directors’ Report for the year ended 31 December 2025 is consistent with the financial statements and has been
prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the company and its environment obtained in the course of the audit,
we did not identify any material misstatements in the Strategic report and Directors’ Report.
DIRECTORS’ REMUNERATION
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance
with the Companies Act 2006.
CORPORATE GOVERNANCE STATEMENT
The Listing Rules require us to review the directors’ statements 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
We believe that net assets is the primary measure used by the shareholders in assessing
the performance of the entity, and is a generally accepted auditing benchmark. This
benchmark provides an appropriate and consistent year on year basis for our audit.
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INDEPENDENT AUDITOR’S REPORT CONTINUED
TO THE MEMBERS OF HERALD INVESTMENT TRUST PLC
UKCorporate Governance Code specified for our review. Our additional responsibilities with respect to the corporate
governance statement as other information are described in the Reporting on other information section of this r
eport.
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 and our knowledge obtained
during the audit, and, except for the matters reported in the section headed ‘Material uncertainty related to going
concern’, we have nothing material to add or draw attention to in relation to:
— The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;
— The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify
emerging risks and an explanation of how these are being managed or mitigated;
— The directors’ statement in the financial statements about whether they considered it appropriate to adopt the
going concern basis of accounting in preparing them, and their identification of any material uncertainties to the
company’s ability to continue to do so over a period of at least 12 months from the date of approval of the financial
statements;
— The directors’ explanation as to their assessment of the company’s prospects, the period this assessment covers and
why the period is appropriate; and
— The directors’ statement as to whether they have a reasonable expectation that the company will be able to
continue in operation and meet its liabilities as they fall due over the period of its assessment, including any related
disclosures drawing attention to any necessary qualifications or assumptions.
Our review of the directors’ statement regarding the longer-term viability of the company was substantially less in
scope than an audit and only consisted of making inquiries and considering the directors’ process supporting their
statement; checking that the statement is in alignment with the relevant provisions of the UK Corporate Governance
Code; and considering whether the statement is consistent with the financial statements and our knowledge and
understanding of the company and its environment obtained in the course of the audit.
In addition, 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 and our knowledge
obtained during the audit:
— The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and
understandable, and provides the information necessary for the members to assess the company's position,
performance, business model and strategy;
— The section of the Annual Report that describes the review of effectiveness of risk management and internal control
systems; and
— The section of the Annual Report describing the work of the Audit Committee.
We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the
company’s compliance with the Code does not properly disclose a departure from a relevant provision of the Code
specified under the Listing Rules for review by the auditors.
RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS AND THE AUDIT
RESPONSIBILITIES OF THE DIRECTORS FOR THE FINANCIAL STATEMENTS
As explained more fully in the Statement of Directors’ Responsibilities, the directors are responsible for the preparation
of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and
fair view. The directors are also responsible for such internal control as they 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
agoing 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.
AUDITORS’ 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 auditors’ 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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line
with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
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Based on our understanding of the company and industry, we identified that the principal risks of non-compliance with
laws and regulations related to breaches of section 1158 of the Corporation Tax Act 2010, and we considered the extent
to which non-compliance might have a material effect on the financial statements. We also considered those laws and
regulations that have a direct impact on the financial statements such as the requirements of the Companies Act 2006.
We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements
(including the risk of override of controls), and determined that the principal risks were related to posting inappropriate
journal entries to present a more favourable financial position. Audit procedures performed by the engagement team
included:
— discussing with the AIFM and the Audit Committee, including specific enquiry of known or suspected instances of
non-compliance with laws and regulation and fraud where applicable;
— reviewing relevant meeting minutes, including those of the Audit Committee and the board of Directors;
— assessing the Company’s compliance with the requirements of section 1158 of the Corporation Tax Act 2010,
including recalculation of numerical aspects of the eligibility conditions;
— identifying and testing year-end journal entries, in particular any material journal entries posted during the
preparation of the financial statements that would manipulate revenue or to increase the net asset value of the
Company; and
— designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances
of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the
financial statements. Also, 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.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data
auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing
complete populations. We will often seek to target particular items for testing based on their size or risk characteristics.
In other cases, we will use audit sampling to enable us to draw a conclusion about the population from which the
sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
USE OF THIS REPORT
This report, including the opinions, has been prepared for and only for the company’s members as a body in
accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these
opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or
into whose hands it may come save where expressly agreed by our prior consent in writing.
OTHER REQUIRED REPORTING
COMPANIES ACT 2006 EXCEPTION REPORTING
Under the Companies Act 2006 we are required to report to you if, in our opinion:
— we have not obtained all the information and explanations we require for our audit; or
— adequate accounting records have not been kept by the company, or returns adequate for our audit have not been
received from branches not visited by us; or
— certain disclosures of directors’ remuneration specified by law are not made; 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.
We have no exceptions to report arising from this responsibility.
APPOINTMENT
We were first appointed by the company for the financial year ended 31 December 2019. Our uninterrupted
engagement covers 7 financial years.
Jeremy Jensen (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
20 February 2026
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FINANCIAL STATEMENTS
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Herald Investment Trust plc
Annual report & financial statements 2025
Financial Statements
64 Statement of Comprehensive Income
65 Statement of Financial Position
66 Statement of Changes in Equity
67 Statement of Cash Flows
68 Notes to the Financial Statements
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2025 2025 2025 2024 2024 2024
Revenue Capital Total Revenue Capital Total
Notes £’000 £’000 £’000 £’000 £’000 £’000
Gains on investments 9 – 98,869 98,869 – 131,830 131,830
Losses on foreign exchange – (735) (735) – (194) (194)
Income 2 15,629 – 15,629 17,169 – 17,169
Investment management fee 3 (12,558) – (12,558) (12,894) – (12,894)
Other administrative expenses 4 (2,250) (10) (2,260) (1,147) (8) (1,155)
Profit before taxation 821 98,124 98,945 3,128 131,628 134,756
Taxation 6 (475) – (475) (460) – (460)
Profit after taxation 346 98,124 98,470 2,668 131,628 134,296
Profit per ordinary share (basic
and diluted) 8 0.70p 198.31p 199.01p 4.96p 244.77p 249.73p
There is no final dividend proposed (2024 – nil). More information on dividend distributions can be found in
note7.
The total column of this statement is the profit and loss account of the Company, prepared in accordance with
UK Accounting Standards.
The profit after taxation is the total comprehensive income and therefore no additional statement of
comprehensive income is presented. The supplementary revenue and capital columns are presented for
information purposes in accordance with the Statement of Recommended Practice issued by the Association of
Investment Companies. All items in the above statement derive from continuing operations of the Company. No
operations were acquired or discontinued in the year.
The accompanying notes are an integral part of this statement.
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2025
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2025 2024
Notes £’000 £’000
Fixed assets
Investments held at fair value through profit or loss 9 1,168,447 1,230,027
Current assets
Cash and cash equivalents 124,266 21,890
Other receivables 10 1,215 1,850
125,481 23,740
Current liabilities
Other payables 11 (1,515) (1,165)
(1,515) (1,165)
Net current assets 123,966 22,575
TOTAL NET ASSETS 1,292,413 1,252,602
Capital and reserves
Called up share capital 12 11,965 12,585
Share premium 13 73,738 73,738
Capital redemption reserve 13 9,987 9,367
Capital reserve 13 1,197,704 1,158,239
Revenue reserve 13 (981) (1,327)
TOTAL SHAREHOLDERS’ FUNDS 1,292,413 1,252,602
NET ASSET VALUE PER ORDINARY SHARE
(including current year income) 14 2,700.49p 2,488.24p
NET ASSET VALUE PER ORDINARY SHARE
(excluding current year income) 14 2,699.77p 2,482.94p
The financial statements of Herald Investment Trust plc (company registration number 02879728) on pages 64 to 67
were approved by the board of directors and authorised for issue on 20 February 2026 and signed on its behalf by
ANDREW JOY
CHAIRMAN
The accompanying notes are an integral part of this statement.
STATEMENT OF FINANCIAL POSITION
At 31 December 2025
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Called up Capital Total
Share Share Redemption Capital Revenue Shareholders’
Capital Premium Reserve Reserve Reserve funds
Notes £’000 £’000 £’000 £’000 £’000 £’000
Shareholders’ funds at 1 January 2025 12,585 73,738 9,367 1,158,239 (1,327) 1,252,602
Profit after taxation – – – 98,124 346 98,470
Shares purchased for cancellation 12 (620) – 620 (58,659) – (58,659)
Shareholders’ funds at 31 December 2025 11,965 73,738 9,987 1,197,704 (981) 1,292,413
For the year ended 31 December 2024
Called up Capital Total
Share Share Redemption Capital Revenue Shareholders’
Capital Premium Reserve Reserve Reserve funds
Notes £’000 £’000 £’000 £’000 £’000 £’000
Shareholders’ funds at 1 January 2024 14,034 73,738 7,918 1,154,062 (3,995) 1,245,757
Profit after taxation – – – 131,628 2,668 134,296
Shares purchased for cancellation 12 (1,449) – 1,449 (127,451) – (127,451)
Shareholders’ funds at 31 December 2024 12,585 73,738 9,367 1,158,239 (1,327) 1,252,602
The accompanying notes are an integral part of this statement.
STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2025
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2025 2025 2024 2024
Notes £’000 £’000 £’000 £’000
Cash flow from operating activities
Profit before taxation 98,945 134,756
Adjustments for gains on investments (98,869) (131,830)
Purchase of investments (247,249) (229,991)
Sale of investments 408,315 335,563
Return of capital 138 348
Decrease in receivables 649 123
Increase/(decrease) in payables 350 (24)
Amortisation of fixed income book cost (755) (1,424)
Effect of foreign exchange rate changes 735 194
Overseas tax on overseas income (489) (465)
Net cash inflow from operating activities 161,770 107,250
Cash flow from financing activities
Shares purchased for cancellation 12 (58,659) (127,451)
Net cash outflow from financing activities (58,659) (127,451)
Net increase/(decrease) in cash and cash equivalents 103,111 (20,201)
Cash and cash equivalents at start of the year 21,890 42,285
Effect of foreign exchange rate changes (735) (194)
Cash and cash equivalents at the end of the year 124,266 21,890
Comprised of:
Cash and cash equivalents 124,266 21,890
Cash flow from operating activities includes interest received of £3,743,000 (2024 – £3,765,000) and dividends
received of £11,053,000 (2024 – £11,896,000).
As the Company did not have any long-term debt at both the current and prior year ends, no reconciliation of
the net debt position is presented.
The accompanying notes are an integral part of this statement.
STATEMENT OF CASH FLOWS
For the year ended 31 December 2025
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1. PRINCIPAL ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES
Herald Investment Trust plc (the “Company”) is a public limited company incorporated in England and Wales with registered
number 02879728, the registered office of which is situated at 10-11 Charterhouse Square, London EC1M 6EE. The Company
is a closed-ended investment company with its ordinary shares being admitted to trading on London Stock Exchange’s Main
Market and to listing of the Official List of the FCA. The financial statements for the year to 31 December 2025 have been
prepared on the basis of the accounting policies set outbelow. The Company has applied “FRS 102 The Financial Reporting
Standard applicable in the UK and Republic of Ireland” (“FRS102”), which forms part of Generally Accepted Accounting
Practice (“UK GAAP”) issued by the Financial Reporting Council.
(A) ACCOUNTING CONVENTION
The financial statements are prepared on the assumption that approval as an investment trust will be retained.
The financial statements are presented in sterling, which is the Company’s functional and presentational currency and the
currency in which the Company’s share capital and expenses, as well the majority of its assets and liabilities, are denominated.
The financial statements have been prepared in accordance with The Companies Act 2006, FRS 102 and with the Statement
ofRecommended Practice ‘Financial Statements of Investment Trust Companies and Venture Capital Trusts’ issued by the
Association of Investment Companies (AIC) in July 2022. The accounting policies applied are unchanged from the prior year
and have been applied consistently.
In order to better reflect the activities of the Company and in accordance with guidance issued by the AIC, supplementary
information which analyses the profit and loss account between items of a revenue and capital nature has been presented
inthe statement of comprehensive income.
As reported in the Going Concern section on page 50, based on the information available to the Directors at the time of this
report, including the results of stress tests, the Company’s cash balances and cash flows, the liquidity of the Company’s
investments and the Company’s ability to meet its liabilities as they fall due, the Directors are satisfied that the Company has
adequate financial resources to enable it to continue in operational existence for a period of 12 months from the approval of
the financial statements.
In addition, as reported in the Going Concern Section, at the year end, and at the date of signing of the financial statements, the
Company has in Saba a significant minority shareholder. As a result of that holding and following discussion with major
shareholders, including Saba, and as explained in more detail in the Chairman’s Statement on pages 8 and 9, on 9 January 2026
the Company launched a Tender Offer. The Tender Offer was subsequently cancelled as Saba voted against the tender and the
board is currently in discussions with Saba in an effort to reach a mutually acceptable outcome for a new tender offer in which
shareholders would be able to tender up to 100% of their holding. If these discussions do not lead to a mutually acceptable
outcome, it is likely that the board would proceed with the Backstop Tender, requiring only a simple majority for approval
whereby Saba could gain a controlling stake and then make changes to the Company’s business and/or operating model, over
which the board does not have full visibility. On the basis that both these options raise inherent uncertainties that could
potentially call into question the Company’s ability to continue to be a going concern for at least 12 months from the date of
approval of these financial statements, the board concluded that there is a material uncertainty that casts significant doubt
about the Company’s ability to continue as a going concern, although it remained appropriate to prepare the financial
statements on a going concern basis. The financial statements do not include adjustments that would be necessary if the
Company was unable to continue as a going concern.
The Directors are of the opinion that the Company is engaged in a single segment of business activity, being investment
business. Consequently, no business segmental reporting is required.
(B) FINANCIAL INSTRUMENTS
The Company recognises financial assets and financial liabilities when the Company becomes a party to the contractual
provisions of the instrument. The Company will offset financial assets and financial liabilities if the Company has a legally
enforceable right to set off the recognised amounts and interests and intends to settle on a net basis.
The Company has chosen to apply the provisions of sections 11 and 12 of FRS 102 in full in respect of the financial instruments.
(C) INVESTMENTS
Purchases and sales of investments are accounted for on a trade date basis.
All investments are at fair value through profit or loss upon initial recognition and are measured at subsequent reporting datesat
fair value. The fair value of listed security investments is bid value. Investments on the Alternative Investment Market are included
at their bid value. The fair value of unquoted investments uses valuation techniques determined by the directors onthe basis of
latest information in line with the relevant principles of the International Private Equity and V
enture Capital Valuation Guidelines.
Gains and losses arising from changes in the unrealised fair value and on the sale of investments are taken to capital reserve
through the statement of comprehensive income.
(D) CASH AND CASH EQUIVALENTS
Cash and cash equivalents may comprise cash as well as cash equivalents (including short-term deposits and money market
funds which are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value).
Investments are regarded as cash equivalents if they meet all of the following criteria: highly liquid investments held in the
Company’s base currency that are readily convertible to a known amount of cash, are subject to an insignificant risk of change
in value and provide a return no greater than the rate of a three-month high quality government bond.
(E) INCOME
Dividend income is accounted for when the entitlement to the income is established (normally on the ex-dividend date).
Franked income is stated net of tax credits. Foreign dividends that suffer withholding tax at source are shown gross, with the
corresponding tax charge in the statement of comprehensive income. Unfranked investment income includes the taxes
deducted at source. Interest from fixed interest securities is recognised on an effective yield basis. Underwriting commission
and interest receivable on deposits are recognised on an accruals basis.
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended 31 December 2025
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(F) EXPENSES
All expenses are accounted for on an accruals basis and are charged through the revenue column of the statement of
comprehensive income except where they relate directly to the acquisition or disposal of an investment (transaction costs)
and are taken to the statement of comprehensive income as a capital item.
(G) FINANCE COSTS
Finance costs are accounted for on an effective interest basis and are charged through the revenue column of the statement
of comprehensive income.
(H) DEFERRED TAXATION
Deferred taxation is provided on all timing differences which have originated but not reversed at the statement of financial
position date, calculated on an undiscounted basis, and based on enacted tax rates relevant to the benefit or liability. Deferred
tax assets are recognised only to the extent that it is more likely than not that there will be taxable profits from which
underlying timing differences can be deducted.
(I) FOREIGN CURRENCY
Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Assets and liabilities denominated in
foreign currencies are translated at the rate of exchange ruling at the statement of financial position date. Exchange differences of
arevenue or capital nature are taken to the revenue or capital reserves
respectively through the statement of comprehensive income.
(J) USE OF JUDGEMENTS AND ESTIMATES
The preparation of financial statements requires the Company to make judgements, estimates and assumptions that affect
amounts reported for assets and liabilities as at the statement of financial position date and the amounts reported for
revenues and expenses during the year. In the course of preparing the financial statements, no judgements have been made
in the process of applying the Company’s accounting policies, that have had a significant effect on the amounts recognised
in the financial statements, other than those involving estimations in the valuations of unquoted investments. The nature of
estimation means that the actual outcomes could differ from those estimates, possibly significantly. The estimates relate to
the investments where there is no appropriate market price i.e. the unquoted investments. Whilst the board considers the
methodologies and assumptions adopted in the valuation are supportable, reasonable and robust, because of the inherent
uncertainty of valuation, those estimated values may differ significantly from the values that would have been used had
aready market for the investment existed.
As at 31 December 2025, the Company does not have any single key assumption concerning the future, or other key sources
of estimation uncertainty that, in the Directors’ opinion, has a significant risk of causing a material adjustment to the carrying
values of assets and liabilities within the next financial year.
(K) SHARES PURCHASED FOR CANCELLATION
When the Company buys back its shares for cancellation, the amount of consideration paid, including directly attributable costs
and any tax effects, is deducted from total shareholders’ funds. Upon cancellation, the nominal value of the shares cancelled is
transferred from the called-up share capital to the capital redemption reserve. Any difference between the total consideration paid
and the nominal value of the shares cancelled is adjusted through the capital reserve.
2. INCOME
2025 2024
£’000 £’000
Dividend income from investments
UK dividends from listed investments 2,801 3,146
UK dividends from unlisted investments and AIM companies 2,565 3,454
Overseas dividends from UK-listed and AIM companies 265 266
Overseas dividend income 5,714 5,157
11,345 12,023
Interest income from equity investments
Income from unlisted and AIM companies UK convertible bonds* (15) 470
Income from unlisted US convertible bonds 17 205
2 675
Fixed interest
UK interest from government securities 68 –
Overseas interest from government securities 2,260 2,656
2,328 2,656
Other income
Deposit interest 1,804 1,702
Other income 150 113
1,954 1,815
Total income 15,629 17,169
* Includes £428,000 receivable interest income written off as an unlisted security was revalued to nil during the year.
Included within dividend income are special dividends of £148,000 (2024 – £330,000).
Included within deposit interest is interest received of £1,804,000 (2024 – £1,702,000).
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3. INVESTMENT MANAGEMENT FEE
2025 2024
£’000 £’000
Investment management fee 12,558 12,894
Herald Investment Management Limited is appointed investment manager under a management agreement which is
terminable on 12 months’ notice. The management fee is 1.0% per annum of the Company’s net asset value (excluding current
year net revenue) based on middle market prices up to £1.25bn and 0.8% per annum on amounts beyond this level. The
management fee is levied on all assets.
4. OTHER ADMINISTRATIVE EXPENSES
2025 2024
£’000 £’000
Custodian’s fees 109 107
Registrar’s fees 45 40
Directors’ fees 185 202
Auditor’s fees – statutory audit* 64 54
Depositary’s fees 224 231
Legal and advisory fees
+
1,156 –
Miscellaneous expenses 467 513
2,250 1,147
* Auditor’s fees excludes VAT. The VAT is included in miscellaneous expenses. The £10,000 (2024 – £5,000) increase in audit fees arose from additional
audit procedures required in respect of going concern.
+
Consist mainly of the costs incurred in respect of the Requisitioned General Meeting of the Company by Saba (held in January 2025), together with
costs incurred during the year in respect of the Tender Circular issued in January 2026.
Other capital administration expenses of £10,000 (2024 – £8,000) consist of custodian transaction charges.
5. FINANCE COSTS OF BORROWING
There were no finance costs of borrowing during the year (2024 – £nil).
6. TAXATION
2025 2024
£’000 £’000
Analysis of charge in year
Overseas taxation 475 460
Factors affecting tax charge for year
The tax charge for the year is lower (2024 – lower) than the standard rate of corporation tax in the UK
of 25.00% (2024 – 25.00%). The differences are explained below:
Profit before taxation 98,945 134,756
Profit multiplied by the standard rate of corporation tax in the UK of 25.00% (2024 – 25.00%) 24,736 33,689
Effects of:
Capital gains not taxable (24,717) (32,957)
UK dividends not subject to UK tax (1,337) (1,621)
Overseas dividends not subject to UK tax (1,493) (1,357)
Capital losses on foreign exchange movements not subject to tax 182 50
Disallowable expenses 2 2
Overseas withholding tax 475 460
Movement in excess management expenses 2,627 2,194
Total tax charge for the year 475 460
As an investment trust, the Company’s capital gains are not taxable.
There is no UK corporation tax charge at 31 December 2025 or 31 December 2024 as the Company has unrelieved
management expenses which are available to be carried forward. The tax charge for 31 December 2025 and 2024 comprises
overseas withholding taxes incurred.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
For the Year Ended 31 December 2025
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At 31 December 2025, the Company had a potential deferred tax asset of £43m (2024 – £41m) on taxable losses of £173m
(2024 – £162m) which are available to be carried forward and offset against future taxable profits. A deferred tax asset has not
been provided on these losses as it is considered unlikely that the Company will make taxable revenue profits in the future and
it is not liable to tax on its capital gains. The potential deferred tax asset has been calculated using acorporation tax rate of
25% (2024 – 25%).
7. DIVIDENDS ON ORDINARY SHARES
2025 2024 2025 2024
£’000 £’000
Amounts recognised as distributions in the year:
Previous year’s final nil nil nil nil
Set out below are the total dividends payable in respect of the financial year, which is the basis on which the requirements of
Section 1158 of the Corporation Tax Act 2010 are considered. As the revenue reserve is in deficit, there is no profit available for
distribution for the year ended 31 December 2025 (2024 – £nil).
2025 2024 2025 2024
£’000 £’000
Amounts paid and proposed per ordinary share in respect of the year:
Proposed final dividend nil nil nil nil
8. PROFIT PER ORDINARY SHARE (BASIC AND DILUTED)
2025 2025 2025 2024 2024 2024
Revenue Capital Total Revenue Capital Total
0.70p 198.31p 199.01p 4.96p 244.77p 249.73p
Revenue, capital and total profit per ordinary share is based on each of the returns on ordinary activities after taxation
respectively, revenue profit of £346,000 (2024 – revenue profit of £2,668,000), capital profit of £98,124,000 (2024 – capital
profit of £131,628,000) and total profit of £98,470,000 (2024 – total profit of £134,296,000) and on 49,480,701 ordinary shares
(2024 – 53,775,344) being the weighted average number of ordinary shares in issue during the year.
There are no dilutive or potentially dilutive shares in issue.
9. INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS
2025 2024
£’000 £’000
Financial assets designated at fair value through profit or loss on initial recognition
Listed UK – equity investments – London Stock Exchange 96,114 139,618
– AIM 173,085 288,515
Listed overseas – equity investments 802,395 723,150
Unquoted 16,626 17,327
Total equity investments 1,088,220 1,168,610
Government debt securities 80,227 61,417
Total investments in financial assets at fair value through profit or loss 1,168,447 1,230,027
See Detailed List of Investments on pages 22 to 28.
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9. INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS CONTINUED
Listed in Listed 2025 2024
UK overseas AIM Unquoted Total Total
£’000 £’000 £’000 £’000 £’000 £’000
Cost of investments at 1 January 66,000 511,288 227,026 27,391 831,705 813,794
Investment holding gains/(losses) 1 January 73,618 273,279 61,489 (10,064) 398,322 386,845
Fair value of investments at 1 January 139,618 784,567 288,515 17,327 1,230,027 1,200,639
Movements in the year:
Purchases at cost 27,966 208,698 9,859 726 247,249 230,129
Sales proceeds (46,991) (265,164) (95,095) (1,065) (408,315) (333,647)
– (losses)/gains on investments (10,415) 134,426 (22,864) (2,278) 98,869 131,830
Amortisation of fixed income book cost 40 715 – – 755 1,424
Transferred from listed to unquoted – (981) – 981 – –
Transferred from unquoted to listed – 726 – (726) – –
Transferred from AIM to listed 5,669
– (5,669) – – –
Transferred from AIM to unquoted – – (1,661) 1,661 – –
Return of capital/capital special dividends – (138) – – (138) (348)
Fair value of investments at 31 December 115,887 862,849 173,085 16,626 1,168,447 1,230,027
Cost of investments at 31 December 67,997 565,496 145,587 29,450 808,530 831,705
Investment holding gains/(losses) 31 December 47,890 297,353 27,498 (12,824) 359,917 398,322
Fair value of investments at 31 December 115,887 862,849 173,085 16,626 1,168,447 1,230,027
Cost of investments sales 31,678 154,812 83,968 583 271,041 213,294
Gains/(losses) on investments
Net realised gains on sales 15,313 110,352 11,127 482 137,274 120,353
Investment holding (losses)/gains (25,728) 24,074 (33,991) (2,760) (38,405) 11,477
(10,415) 134,426 (22,864) (2,278) 98,869 131,830
The Company received £408,315,000 (2024 – £333,647,000) from investments sold in the year. The book cost of these
investments when they were purchased was £271,041,000 (2024 – £213,294,000). 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.
The investments in the equity and fixed interest stocks of unlisted companies that the Company holds are not traded and as
such the prices are more uncertain than those of more widely traded securities. The fair value of unlisted investments uses
valuation techniques determined by the directors on the basis of latest information in line with the relevant principles of the
International Private Equity and Venture Capital Valuation Guidelines as described in note 1(c). The fair value of unquoted
investments at 31 December 2025 was £16,626,000 (2024 – £17,327,000) and the investment is not considered material in the
context of these financial statements.
At 31 December 2025 the Company was the beneficial owner of 15.4% (2024 – 15.4%) of the ordinary share capital of HIML
Holdings Limited. HIML Holdings Limited is incorporated in the United Kingdom and is the parent company of the Company’s
Manager.
2025 2024
£’000 £’000
Transaction costs
Commission costs:
Purchases 513 366
Sales 837 551
Total commission costs 1,350 917
Custody transaction costs 10 8
Other transaction costs 110 38
1,470 963
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
For the Year Ended 31 December 2025
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10. OTHER RECEIVABLES
2025 2024
£’000 £’000
Due within one year:
Prepayments and accrued income 1,074 1,723
Taxation recoverable 141 127
1,215 1,850
The carrying amount of other receivables is a reasonable approximation of fair value.
11. OTHER PAYABLES
2025 2024
£’000 £’000
Amounts falling due within one year:
Other payables 1,515 1,165
1,515 1,165
Included in other payables and accruals is £1,072,000 (2024 – £1,046,000) in respect of the investment management fee.
12. CALLED UP SHARE CAPITAL
2025 2025 2024 2024
Number £’000 Number £’000
Allotted, called up and fully paid ordinary shares of 25p:
Brought forward 50,340,861 12,585 56,134,670 14,034
Shares bought back and cancelled (2,482,394) (620) (5,793,809) (1,449)
Carried forward 47,858,467 11,965 50,340,861 12,585
At the AGM held on 24 March 2025 the Company’s authority to buy back up to 14.99% of its issued share capital at that date
was renewed. During the year to 31 December 2025 a total of 2,482,394 (2024 – 5,793,809) ordinary shares of 25p each with
anominal value of £620,000 (2024 – £1,449,000) were bought back and cancelled at a total cost of £58,659,000 (2024 –
£127,451,000). This was 4.9% (2024 – 10.3%) of the ordinary shares in issue at the start of the year. At 31 December 2025 the
Company had authority to buy back a further 5,063,701 ordinary shares. Under the provisions of the Company’s articles share
buy-backs are funded from the capital reserve.
13. CAPITAL AND RESERVES
Capital
Share Redemption Capital Revenue
Premium Reserve Reserve Reserve
£’000 £’000 £’000 £’000
At 1 January 2025 73,738 9,367 1,158,239 (1,327)
Shares purchased for cancellation – 620 (58,659) –
Gains on sales – – 137,274 –
Changes in investment holding gains – – (38,405) –
Other exchange differences – – (735) –
Custody transaction and capital legal costs – – (10) –
Profit after taxation – – – 346
Balance at 31 December 2025 73,738 9,987 1,197,704 (981)
At 1 January 2024 73,738 7,918 1,154,062 (3,995)
Shares purchased for cancellation – 1,449 (127,451) –
Gains on sales – – 120,353 –
Changes in investment holding gains – – 11,477 –
Other exchange differences – – (194) –
Custody transaction and capital legal costs – – (8) –
Profit after taxation – – – 2,668
Balance at 31 December 2024 73,738 9,367 1,158,239 (1,327)
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13. CAPITAL AND RESERVES CONTINUED
The share premium represents the premium above nominal value received by the Company on issuing shares net of cost. The
share premium is non-distributable.
The capital redemption reserve represents the nominal value of shares bought back and cancelled and is non-distributable.
The capital reserve includes investment holding gains of £359,917,000 (2024 – gains of £398,322,000) as disclosed in note 9.
The capital reserve is non-distributable except for the buy back of shares.
The revenue reserve represents cumulative net revenue retained after payment of any dividends and is the only reserve from
which dividends can be funded. Dividends can only be paid when this reserve is in surplus.
14. NET ASSET VALUE PER ORDINARY SHARE
The net asset value per ordinary share and the net assets attributable to the ordinary shareholders at the year end calculated in
accordance with the articles of association were as follows:
2025 2024
per share per share 2025 2024
(pence) (pence) £’000 £’000
Total net assets (including current year revenue) 2,700.49 2,488.24 1,292,413 1,252,602
Less revenue profit after taxation (0.72) (5.30) (346) (2,668)
Total net assets (excluding current year revenue) 2,699.77 2,482.94 1,292,067 1,249,934
Net asset value per ordinary share is based on net assets as shown above and on 47,858,467 (2024 – 50,340,861) ordinary
shares, being the number of ordinary shares in issue at each balance sheet date.
15. CONTINGENT LIABILITIES, GUARANTEES AND FINANCIAL COMMITMENTS
There were no contingent liabilities, guarantees or financial commitments at 31 December 2025 (2024 – nil).
16. CAPITAL MANAGEMENT
The Company does not have any externally imposed capital requirements. The capital of the Company is the ordinary share
capital and reserves as detailed in notes 12 and 13. It is managed in accordance with its investment policy in pursuit of its
investment objective, both of which are detailed on pages 2 and 34 respectively, and shares may be repurchased in
accordance with its annual authority as detailed in note 12.
17. FINANCIAL INSTRUMENTS
In accordance with the corporate objective of maximising capital appreciation the Company invests in securities on
aworldwide basis. The Company may make use of gearing to achieve improved performance in rising markets. The
Company’s other financial instruments consist of cash and cash equivalents, short term debtors and creditors.
The main risks arising from the Company’s financial instruments are:
A. MARKET RISK
(i) Other price risk, being the risk that the value of investment holdings will fluctuate as a result of changes in market prices
caused by factors other than interest rate or currency rate movement;
(ii) Interest rate risk, being the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market interest rates; and
(iii) Foreign currency risk, being the risk that the fair value or future cash flows of a financial instrument will fluctuate because
of changes in foreign exchange rates.
B. CREDIT RISK
Being the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an
obligation.
The Company invests in government debt securities which are investment grade.
Cash and cash equivalent balances are held only with approved deposit takers which are regulated entities and considered of
high credit quality.
The Company is exposed to counterparty credit risk from the parties with which it trades and will bear the risk of settlement
default. Counterparty credit risk to the Company arises from transactions to purchase or sell investments held within the
portfolio.
There were no past due nor impaired assets as of 31 December 2025 (2024 – nil).
The counterparties engaged with the Company are regulated entities and of high credit quality.
C. LIQUIDITY RISK
Being the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities.
These risks and the policies for managing them have been applied throughout the year and are summarised below. Further
detail is contained in the strategic report on page 36.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
For the Year Ended 31 December 2025
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A. MARKET RISK
(i) Other Price Risk
The Company’s investment portfolio is exposed to market price fluctuations which are monitored by the Manager in
pursuance of the corporate objective. Quoted securities held by the Company are valued at bid prices, whereas material
unquoted investments are valued by the directors on the basis of the latest information in line with the relevant principles of
the International Private Equity and Venture Capital Valuation Guidelines (Accounting Policy 1(c)). These valuations represent
the fair value of the investments, see note 9.
A full list of the Company’s investments is given on pages 22 to 28. In addition, a geographical analysis of the portfolio, an
analysis of the investment portfolio by broad industrial or commercial sector and a review of the 20 largest equity investments
by their aggregate market value, are shown on pages 18 to 21.
Other Price Risk Sensitivity
8.8% of the Company’s total equity investments at 31 December 2025 (2024 – 11.9%) were listed on the main list of the
London Stock Exchange and a further 15.9% (2024 – 24.7%) on AIM. The NASDAQ Stock Exchange accounts for 32.2% (2024 –
26.6%), New York Stock Exchange for 11.7% (2024 – 7.8%) and other stock exchanges or unquoted 31.4% (2024 – 29.0%).
A10% increase in equity investment prices at 31 December 2025 would have increased total net assets and profit & loss after
taxation by £108,822,000 (2024 – £116,861,000). A decrease of 10% would have the exact opposite effect. The portfolio does
not target any exchange as a comparative index, and the performance of the portfolio has a low correlation to generally used
indices.
The shares of Herald Investment Trust plc have an underlying NAV per share. The NAV per share of Herald Investment Trust plc
fluctuates on a daily basis. In addition, there is volatility in the discount/premium the share price has to NAV.
(ii) Interest Rate Risk
The majority of the Company’s assets are equity shares and other investments which neither pay interest nor have a maturity
date. However, the Company does hold convertible bonds and Government bonds, the interest rate and maturity dates of
which are detailed below. Interest is accrued on cash balances at a rate linked to the local base rate.
The interest rate risk profile of the financial assets and financial liabilities at 31 December was:
FINANCIAL ASSETS
2025 2024
2025 Weighted 2024 Weighted
Weighted average Weighted average
average period average period
interest until interest until
2025
rate/ maturity/ 2024 rate/ maturity/
Fair value interest maturity Fair value interest maturity
£’000 rate date £’000 rate date
Fixed rate:
US bonds 29,689 3.8% 0.3 years 31,919 3.9% 0.3 years
EMEA bonds 15,795 1.5% 0.1 years 14,689 1.8% 0.2 years
Asia Pacific bonds 14,971 1.3% 0.8 years 14,809 1.3% 1.8 years
UK bonds 19,772 1.5% 0.6 years – – –
Overseas convertible bonds – – – 559 18.0% 0.1 years
UK convertible bonds – – – 835 16.0% 1.7 years
Floating rate cash:
Non-sterling 87,208 2.1% 8,593 4.0%
Sterling 37,058 3.6% 13,297 4.9%
124,266 21,890
The benchmark rate which determines the interest payments received on cash balances is the Bank of England base rate, the
European Central Bank rate and the United States Federal Reserve rate.
Interest rate risk sensitivity
(a) Cash
An increase of 100 basis points in interest rates as at 31 December 2025 would have a direct effect on net assets. Based on the
position at 31 December 2025, over a full year, an increase of 100 basis points would have increased the profit & loss after
taxation by £1,243,000 (2024 – £219,000) and would have increased the net asset value per share by 2.60p (2024 – 0.44p).
The calculations are based on the cash balances as at the respective balance sheet dates and are not representative of the year
as a whole.
(b) Fixed rate bonds
An increase of 100 basis points in bond yields as at 31 December 2025 would have decreased total net assets and profit & loss after
taxation by £332,000 (2024 – £367,000) and would have decreased the net asset value per share by 0.69p (2024 – 0.73p).
Adecrease in bond yields would have had an equal and opposite effect. The convertible loan stocks having an element of equity
are not included in this analysis as given the nature of the businesses and the risk profile of their balance sheets; they are
considered to have more equity like characteristics.
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17. FINANCIAL INSTRUMENTS CONTINUED
(iii) Foreign Currency Risk
The Company’s reporting currency is sterling, but investments are made in overseas markets as well as the United Kingdom
and the asset value can be affected by movements in foreign currency exchange rates.
Furthermore many companies trade internationally both through foreign subsidiaries, and through exports. The greatest
foreign currency risk occurs when companies have a divergence in currencies for costs and revenues. A much less risky
exposure to currency is straight translation of sales and profits. The list of investments on pages 22 to 28 breaks down the
portfolio by geographic listing. However the location of the stock market quote only has a limited correlation to the costs,
revenues and even activities of those companies, and so this note should not be regarded as a reliable guide to the sensitivity
of the portfolio to currency movements. For example, the holdings in the portfolio that have suffered most from
US$weakness are UK companies with dollar revenues and sterling costs.
The Company does not hedge the sterling value of investments that are priced in other currencies. Overseas income is subject
to currency fluctuations. The Company does not hedge these currency fluctuations because it is impossible to quantify the
effect for the reasons stated above. However, from time to time the manager takes a view by holding financial assets or
liabilities in overseas currencies.
Exposure to currency risk through asset allocation by currency of listing is indicated below:
At 31 December 2025
Other
receivables
Cash and and Net
Investments deposits payables exposure
£’000 £’000 £’000 £’000
US dollar 507,005 16,668 279 523,952
Euro 87,609 29,629 124 117,362
Taiwan dollar 55,582 6,931 21 62,534
Australian dollar 23,013 33,980 – 56,993
Japanese yen 53,980 – 69 54,049
Norwegian krone 40,773 – 205 40,978
Canadian dollar 33,069 – 9 33,078
Swedish krona 18,678 – – 18,678
Korean won 18,312 – 78 18,390
Singaporean dollar 14,971 – 31 15,002
Other overseas currencies 9,857 – 10 9,867
Exposure to currency risk on translation of valuations of securities listed in
overseas currencies 862,849 87,208 826 950,883
Sterling 305,598 37,058 (1,126) 341,530
1,168,447 124,266 (300) 1,292,413
At 31 December 2024
Other
receivables
Cash and and Net
Investments deposits payables exposure
£’000 £’000 £’000 £’000
US dollar 436,547 2,663 344 439,554
Euro 101,417 2,771 95 104,283
Taiwan dollar 51,898 3,159 – 55,057
Japanese yen 47,741 – 44 47,785
Norwegian krone 36,083 – 207 36,290
Canadian dollar 32,895 – 16 32,911
Australian dollar 27,039 – – 27,039
Swedish krona 19,257 – – 19,257
Singaporean dollar 14,920 – 32 14,952
Other overseas currencies 17,494 – 139 17,633
Exposure to currency risk on translation of valuations of securities listed in
overseas currencies 785,291 8,593 877 794,761
Sterling 444,736 13,297 (192) 457,841
1,230,027 21,890 685 1,252,602
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
For the Year Ended 31 December 2025
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Foreign currency risk sensitivity
At 31 December 2025, had sterling strengthened by 10% (2024 – 10%) in relation to all currencies, with all other variables held
constant, total net assets and profit & loss after taxation would have decreased by the amounts shown below based on the
balances denominated in foreign currency. A 10% (2024 – 10%) weakening of sterling against all currencies, with all other
variables held constant, would have had the exact opposite effect on the financial statement amounts. However, companies
whose cost base diverges in currency terms from its sales will in the longer term have a significantly greater effect on valuation
than simple translation. In the short term investee companies generally cover their currency exposure to varying degrees.
There is insufficient publicly disclosed information to quantify this, but in the long-term this effect is expected to dwarf simple
translation of foreign listings in terms of both risk and reward, because many investee companies trade globally. Furthermore,
the country of listing is not necessarily an indication of the geography of some or even any operational activities for investee
companies. The Manager does not use financial instruments to protect against currency movements. From time to time
financial leverage has been made using debt in overseas currencies.
2025 2024
£’000 £’000
US dollar 52,395 43,955
Euro 11,736 10,428
Taiwan dollar 6,253 5,506
Australian dollar 5,699 2,704
Japanese yen 5,405 4,779
Norwegian krone 4,098 3,629
Canadian dollar 3,308 3,291
Swedish krona 1,868 1,926
Korean won 1,839 1,372
Singaporean dollar 1,500 1,495
Other overseas currencies 987 391
95,088 79,476
B. Credit Risk
Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment which it
has entered into with the Company. The Manager monitors counterparty risk on an ongoing basis.
The Company has investments in convertible loan stocks that have an element of equity. These securities are viewed as having
a risk profile similar to the equity holdings. This is because the convertibles held are in nascent technology companies that
may be loss making and may have weak balance sheets. For this reason these stocks are categorised as equity holdings and for
risk management purposes excluded from the credit risk analysis.
Credit Risk Exposure
The exposure to credit risk at 31 December was:
Credit rating 2025 2024
(S&P) £’000 £’000
Government debt securities
Norway AAA 15,795 14,689
Singapore AAA 14,971 14,809
UK AA 19,772 –
US AA+ 29,689 31,919
80,227 61,417
Cash and cash equivalents 124,266 21,890
204,493 83,307
During the year the maximum exposure in fixed interest investments was £81,019,000 (2024 – £61,804,000) and the minimum
£30,163,000 (2024 – £29,506,000). The maximum exposure in cash was £124,266,000 (2024 – £68,825,000) and the
minimum £37,480,000 (2024 – £21,890,000).
C. Liquidity Risk
The Company’s policy with regard to liquidity is to provide a degree of flexibility so that the portfolio can be repositioned when
appropriate and that most of the assets can be realised without an excessive discount to the market price.
Equity Securities
The Company’s unquoted investments are not readily realisable, but these only amount to 1.3% of the Company’s total assets
at 31 December 2025 (2024 – 1.4%).
In practice, liquidity in investee companies is imperfect, particularly those with a market value of less than £100m. To reduce
this liquidity risk it is the policy to diversify the holdings and generally to restrict the holding in any one company to less than
10% of the share capital of that company. Furthermore, to contain the risk of any one holding, the Manager generally takes
profits when a holding reaches more than 5% of the portfolio.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
For the Year Ended 31 December 2025
17. FINANCIAL INSTRUMENTS CONTINUED
Equity Securities continued
The market valuation of each underlying security gives an indication of value, but the price at which an investment can be
made or realised can diverge materially from the bid or offer price depending on market conditions generally and particularly
to each investment. 8.7% (£93m) (2024 – 11.9% (£136m)) of the listed equities in the portfolio are invested in stocks with
amarket capitalisation below £100m, where liquidity is expected to be more limited. If these stocks had on average
arealisable value 20% below the bid price the value of the total fund would be adversely affected by 1.4% (2024 – 2.2%).
Liquidity Risk Exposure
Contractual maturities of the financial liabilities at the year end, based on the earliest date on which payment can be required
are as follows:
2025 2024
One year One year
or less or less
£’000 £’000
Other payables 1,515 1,165
1,515 1,165
Fair Value of Financial Instruments
The Company’s investments, as disclosed in the Company’s balance sheet, are valued at fair value.
Nearly all of the Company’s portfolio of investments are disclosed in the Level 1 category as defined in FRS 102.
Categorisation is based on the lowest level input that is significant to the fair value measure in its entirety.
The three levels set out in FRS 102 follow:
Level 1 – The unadjusted quoted price in an active market for identical assets or liabilities that the entity can access at the
measurement date.
Level 2 – Inputs other than quoted prices included within Level 1 that are observable (i.e. developed using market data) for the
asset or liability, either directly or indirectly.
Level 3 – Inputs are unobservable (i.e. for which market data is unavailable) for the asset or liability.
The investment manager considers observable data to be that market data that is readily available, regularly distributed or
updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant
market.
The analysis of the valuation basis for the financial instruments based on the hierarchy as at 31 December is as follows:
At 31 December 2025
Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Financial assets
Equity investments 1,071,594 – 11,239 1,082,833
Government debt securities 80,227 – – 80,227
Unquoted loan stocks – – 5,387 5,387
Total investments 1,151,821 – 16,626 1,168,447
At 31 December 2024
Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Financial assets
Equity investments 1,151,283 – 10,546 1,161,829
Government debt securities 61,417 – – 61,417
Unquoted loan stocks – – 6,781 6,781
Total investments 1,212,700 – 17,327 1,230,027
Unquoted Investments are valued £16,626,000 as at 31 December 2025 (2024 – £17,327,000). A 10% increase in unquoted
equity investment prices at 31 December 2025 would have increased total net assets and profit & loss after taxation by
£1,662,600 (2024 – £1,732,700). A decrease of 10% would have the exact opposite effect.
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A reconciliation of fair value measurements in Level 3 is set out below:
At 31 December 2025
£’000
Opening balance at 1 January 2025 17,327
Purchases 726
Sales (1,065)
Total gains or (losses)
– on assets sold during the year 482
– on assets held at 31 December 2025 (2,760)
Net assets transferred during the year 1,916
Closing balance at 31 December 2025 16,626
At 31 December 2024
£’000
Opening balance at 1 January 2024 15,085
Purchases 3,000
Sales (2,361)
Total losses
– on assets sold during the year (87)
– on assets held at 31 December 2024 (6,753)
Net assets transferred during the year 8,443
Closing balance at 31 December 2024 17,327
18. RELATED PARTY TRANSACTIONS AND TRANSACTIONS WITH THE MANAGER
Under UK GAAP, the Company has identified the directors as related parties. The directors’ emoluments and interests have
been disclosed within the Directors’ Remuneration Report on page 53 with additional disclosure in note 4. No other related
parties have been identified.
The Company has agreements with HIML for the provision of management, accounting and administration services and
promotional activities as disclosed in the Strategic Report on page 40. Details of transactions during the year are disclosed in
note 3 and 11.
19. POST BALANCE SHEET EVENTS
The Chairman’s Statement sets out the position of the Company given the ongoing large shareholding of Saba and the
non-alignment of short-term and long-term shareholders’ objectives. The board – following lengthy discussions with major
shareholders including Saba and in agreement with the Manager – have attempted to address the situation, beginning with the
proposed Tender Offer announcement on 9 January 2026. Further details can also be found in the circular sent to
shareholders on 12 January 2026, a copy of which is available at www.heralduk.com. Subsequent events are set out in the
Short Summary of Recent Events which immediately follows the Chairman’s Statement.
Other than the above there are no significant events after the end of the reporting period requiring disclosure.
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FURTHER SHAREHOLDER INFORMATION
HERALD INVESTMENT TRUST PLC
The Company is an investment trust. Investment trusts offer
investors the following:
— Participation in a diversified portfolio of shares;
— Constant supervision by experienced professional
managers;
— The Company is free from capital gains tax on capital
profits realised within the portfolio; and
— The opportunity to achieve improved performance for
shareholders’ funds in rising markets by the borrowing of
additional money.
HOW TO INVEST
The Company’s shares are traded on the London Stock
Exchange. They can be bought by placing an order with
astockbroker or an online share dealing platform or by
asking a professional adviser to do so.
SOURCES OF FURTHER INFORMATION ON THE COMPANY
The price of shares is quoted daily in the Financial Times, The
Daily Telegraph and The Times. The NAV per share is
calculated and released daily to the London Stock Exchange
and monthly to the Association of Investment Companies.
KEY DATES
If a dividend is declared in respect of a financial year, it is
normally paid mid May.
TAXATION
The price of the ordinary shares (adjusted for the price of
attributable warrants) on 21 February 1994, which was the
first day of trading, was 90.9p. The amount attributable to the
warrants for the purpose of capital gains tax is 9.1p per share
issued (1994 Annual Report). Any shareholder uncertain of his
or her position is recommended to seek expert advice.
ISAs
The ordinary shares of the Company are qualifying
investments for individual saving accounts.
ELECTRONIC PROXY VOTING
If you hold stock in your own name you should vote by
returning proxies electronically at
https://uk.investorcentre.mpms.mufg.com/ or via the
Investor Centre app. Ifyou have any questions about this
service please contact MUFG Corporate Markets on 0371 664
0300. Calls are charged at the standard geographic rate and
will vary by provider. Calls outside the United Kingdom will be
charged at the applicable international rate. Lines are open
between 9.00am and 5.30pm Monday to Friday (excluding
public holidays in England and Wales). Shareholders who
wish to do so can obtain a hard copy proxy form by calling
the above number or writing to the registrar at: MUFG
Corporate Markets, Central Square, 29 Wellington Street,
Leeds LS14DL.
MAINSTREAM INVESTMENT
The Company conducts its affairs so that its ordinary shares
are capable of being recommended by independent financial
advisors to ordinary retail investors in accordance with
relevant FCA rules. Our ordinary shares are, we consider,
mainstream investment products because they are shares in
an investment trust. The Company intends to continue
conducting its affairs for the foreseeable future so that the
ordinary shares can continue to be categorised as
mainstream.
KEY INFORMATION DOCUMENT (“KID”)
Since 1 January 2018 there is a requirement to make a KID
available to retail investors in the Company. The KID provides
key information about the Company’s shares as an
investment product. The information is required by law to
help potential shareholders understand the nature, risks,
costs, potential gains and losses of the Company’s shares
and to help them compare it with other products. The KID
can be viewed at
https://www.heralduk.com/the-packaged-retail-and-insuran
ce-based-investment pr
oducts -regulation-priips/.
ALTERNATIVE INVESTMENT FUND MANAGERS DIRECTIVE
(AIFMD)
The UK version of the AIFMD, an European Union Directive
which came into force on 22 July 2013 and which is part
ofUK law by virtue of the European Union (Withdrawal)
Act2018, as amended by The Alternative Investment Fund
Managers (Amendment etc.) (EU Exit) Regulations 2019 and
any further equivalent UK legislation replacing or superseding
the AIFMD. The UK AIFMD regulates fund managers that
manage alternative investment funds (this includes
investment trusts).
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DIRECTORS
Andrew Joy
Stephanie Eastment
Priya Guha MBE
Henrietta Marsh
Christopher Metcalfe
COMPANY SECRETARY
NSM Funds (UK) Limited
4th Floor
46-48 James Street
London
W1U 1EZ
HIT@nsm.group
REGISTERED OFFICE
10–11 Charterhouse Square
London
EC1M 6EE
COMPANY NUMBER
02879728
(England and Wales)
DEPOSITARY, CUSTODIAN AND ADMINISTRATOR
The Bank of New York Mellon (International) Limited
160 Queen Victoria Street
London
EC4V 4LA
ALTERNATIVE INVESTMENT FUND MANAGER AND
MANAGER
Herald Investment Management Limited
10-11 Charterhouse Square
London
EC1M 6EE
Tel: 020 7553 6300
Fax: 020 7490 8026
Website: www.heralduk.com
Email: info@heralduk.com
INDEPENDENT AUDITOR
PricewaterhouseCoopers LLP
7 More London Riverside
London
SE1 2RT
LEGAL ADVISER
Dickson Minto LLP
Dashwood House
69 Old Broad Street
London
EC2M 1QS
CORPORATE BROKER
Singer Capital Markets Securities Limited
One Bartholomew Lane
London
EC2N 2AX
Peel Hunt LLP
7th Floor
100 Liverpool Street
London
EC2M 2AT
REGISTRARS
MUFG Corporate Markets (formerly known as Link Group)
Central Square
29 Wellington Street
Leeds
LS1 4DL
Tel: 0371 664 0300
Calls are charged at the standard geographic rate and will
vary by provider. Calls outside the United Kingdom will be
charged at the applicable international rate. Lines are open
between 9.00am and 5.30pm Monday to Friday (excluding
public holidays in England and Wales).
Website: eu.mpms.mufg.com
Email: shareholderenquiries@cm.mpms.mufg.com
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ALTERNATIVE PERFORMANCE MEASURE (“APM”)
An APM is a numerical measure of the Company’s current,
historical or future performance, financial position or cash
flows other than a financial measure defined or specified in
the applicable financial framework. The following APMs are
typically used within the investment trust sector to provide
additional useful information to shareholders and others and
to help assess an investment trust’s performance and
position against its peers and the market generally. The
Company’s directors have therefore chosen the following
APMs as useful measures, however, make the important
distinction for the discount APM that the Company does not
target or attempt to control the discount (or premium) given
that this is a function of the stock market’s view of the
Company’s share price.
GEARING
The gearing ratio reflects the degree to which the Company
is exposed to movements on its investment portfolio. The
gearing ratio indicates the extra amount by which
shareholders’ funds would move if the Company’s
investments were to rise or fall. A gearing ratio higher than
100 indicates the extent to which shareholders’ funds are
geared; a gearing ratio of 100 shows the Company is
ungeared and fully invested; and a gearing ratio lower than
100 indicates that the Company is not fully invested. There
are several ways to calculate gearing, and the following
methods are used in this report.
Gross gearing
This reflects the amount of borrowings in use by the
Company and takes no account of any cash balances or
amounts invested in government debt securities which the
directors deem to be equivalent to cash for the purpose of
the net gearing/net cash calculation.
Net gearing or net cash
This reflects the amount of borrowings actively invested ,
i.e.investments (excluding amounts invested in government
debt securities) divided by shareholders’ funds. A net cash
position arises when cash and cash equivalents and
government debt securities held are greater than borrowings.
31 December 31 December
2025 2024
PAGE £’000 £’000
Cash and cash equivalents 65 A 124,266 21,890
Add: Government debt
securities 71 B 80,227 61,417
Total cash and cash
equivalents and
government debt securities C=A+B 204,493 83,307
Net assets 65 D 1,292,413 1,252,602
Add: borrowings E – –
Net assets plus borrowings F=D+E 1,292,413 1,252,602
Less: Total cash and
cash equivalents and
government debt securities C (204,493) (83,307)
Total assets (excluding total
cash and cash equivalents and
government debt
securities) G=F-C 1,087,920 1,169,295
Gross gearing F/D 100 100
Net gearing G/D n/a n/a
Net cash G/D 84 93
NET ASSET VALUE (NAV) PER ORDINARY SHARE
The value of the Company’s assets less any liabilities for
which the Company is responsible, divided by the number of
shares in issue. See note 14. The NAV per ordinary share is
published daily.
The NAV per ordinary share is shown both including and
excluding current year revenue.
The change in NAV per share (see total return below) during
2025, as shown on page 1, is calculated by taking 2025 total
return and dividing by the opening NAV for the year (that is,
the NAV disclosed for 31 December 2024).
ALTERNATIVE PERFORMANCE MEASURES
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Annual report & financial statements 2025
ONGOING CHARGES
The ongoing charges figure have been calculated in
accordance with AIC guidelines: annualised charges (total
expenses), excluding non-recurring expenses and interest,
incurred by the Company, divided by the average daily net
asset values throughout the year.
The ongoing charges are derived in accordance with the
following table:
2025 2024
PAGE £’000 £’000
Investment management fee 64 A 12,558 12,894
Other administrative
expenses 64 B 2,260 1,155
Less:
Custody costs in relation to
trades C (10) (8)
Non-recurring expenses* D (1,188) (80)
Ongoing charges E=A+B+C+D 13,620 13,961
Average net assets F 1,256,950 1,290,744
Ongoing charges figure E/F 1.08% 1.08%
* Non recurring expenses for 2025 consist mainly of the costs incurred in
respect of the General Meeting requisitioned by Saba held in January
2025, together with costs incurred during the year in respect of the
Tender Circular issued in January 2026.
TOTAL RETURN
Share price and NAV total returns show how the NAV and
share price have performed over a period of time in
percentage terms, taking into account both the movement in
share price/NAV and any dividends paid to shareholders.
Share
PAGE Price NAV
Opening at 1 January 2025 3 A 2,430.0p 2,488.2p
Closing at 31 December 2025 3 B 2,405.0p 2,700.5p
Price movements C=(B-A)/A (1.0%) 8.5%
Dividend reinvestment* D 0.0% 0.0%
Total return C+D (1.0%) 8.5%
Share
PAGE Price NAV
Opening at 1 January 2024 29 A 1,922.0p 2,219.2p
Closing at 31 December 2024 3 B 2,430.0p 2,488.2p
Price movements C=(B-A)/A 26.4% 12.1%
Dividend reinvestment* D 0.0% 0.0%
Total return C+D 26.4% 12.1%
* No dividend has been declared for the year (2024 – nil).
DISCOUNT OR PREMIUM
The amount by which the share price of an investment trust
is either higher (premium) or lower (discount) than the NAV
per share, expressed as a percentage of the NAV per share.
31 December 31 December
DISCOUNT OR PREMIUM PAGE 2025 2024
Share Price (p) 3 A 2,405.0 2,430.0
Net Asset Value per share (p) 3 B 2,700.5 2,488.2
Discount (A-B)/B 10.9% 2.3%
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Herald Investment Trust plc
Annual report & financial statements 2025
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Herald Investment Trust plc
10–11 Charterhouse Square
London EC1M 6EE
020 7553 6300
www.heralduk.com
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