## UK Smaller Companies Investment Trust PLC
## (“MUSCIT”)
## The best way to get to know
## a Smaller Company isn’t by
## looking at a spreadsheet
## Annual Report and Accounts 2025
## Contents
Reasons to Invest 1
Highlights 2
Strategic Report
Chairman’s Statement 3
Manager’s Report 6
Ten Largest Holdings 11
Twenty Largest Holdings 13
Analysis of Investment Portfolio by Industrial or Commercial Sector 14
Business Model and Strategy 15
Principal and Emerging Risks 17
Directors’ Duties 21
Governance
Board of Directors 25
Directors’ Report 27
Corporate Governance Statement 31
Report from the Audit and Management Engagement Committee 35
Directors’ Remuneration Report 38
Statement of Directors’ Responsibilities 41
Financial Report
Independent Auditor’s Report 42
Income Statement 49
Statement of Changes in Equity 50
Balance Sheet 51
Notes to the Financial Statements 52
Other Information
AIFMD Disclosures 63
Alternative Performance Measures 64
Glossary of Terms 66
Shareholder Information 67
Notice of Annual General Meeting 69
Advisers 76
This document is important and refers to certain matters on which voting action
is required. Shareholders who are in any doubt as to what action to take should
consult an appropriate independent adviser.
If any shareholder has sold or transferred their shares in the Company, he or
she should pass this document to the purchaser or transferee or to the person
through whom the transfer or sale was effected for onward transmission to the
transferee or purchaser.
Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025 page 1
## Reasons to Invest

| Long track record | Experienced Manager |
| --- | --- |
| Outperformed by 390% since | One of the largest specialist |
| launch in 1995 | SmallCap teams in Europe |

## Discount opportunity
## Interests aligned
8% discount vs a 3% premium at
MAM’s biggest investment
end of 2022

| Good timing | Quarterly Income |
| --- | --- |
| UK SmallCap has rarely been so | Annual yield of c.6% of NAV |
| cheap. Quality Growth is attractive | (6.5% of Share Price given discount) |

### The trust is a long-term holder of stocks, with a track record of identifying
### multi-baggers*, including:
Held for 20 years Held for 15 years Held for 12 years
## 443% 559% 533%
total return total return total return
### While investing in exciting new ideas:
* A multi-bagger is an investment that has increased in value by multiple times its original purchase price.
Total return figures are based on initial purchase price. Data as at 31 March 2025. Figures relate to current
holdings only and exclude any past holdings that may have achieved multi-bagger status.
page 2

Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025

## Highlights

for the year ended 31 March 2025

### Investment Objective

The investment objective of Montanaro UK Smaller Companies Investment Trust PLC (the “Company” or “MUSCIT”) is to achieve capital appreciation through investing in smaller quoted companies listed on the London Stock Exchange or traded on AIM and to outperform its benchmark, the Deutsche Numis Smaller Companies Index (excluding investment companies) (“NSCI”).

### Performance

|  Total Returns | 1 year | 3 year | 5 year | 10 year | Since launch  |
| --- | --- | --- | --- | --- | --- |
|  Share Price^{1} | 1.0% | (10.8%) | 20.3% | 52.3% | 854.0%  |
|  Net Asset Value (“NAV”) per share^{1} | (6.9%) | (11.4%) | 14.3% | 30.4% | 808.6%  |
|  Benchmark^{2} | 2.3% | 2.7% | 68.2% | 60.3% | 570.6%  |
|  Benchmark (including AIM)^{3} | (0.4%) | (11.1%) | 49.0% | 47.7% | 477.9%  |

Sources: Deutsche Numis, Bloomberg, Association of Investment Companies (“AIC”), Montanaro Asset Management Limited (“MAM”).

|  As at 31 March | 2025 | 2024 | % change  |
| --- | --- | --- | --- |
|  Ordinary share price | 97.00p | 101.00p | (4.0)  |
|  NAV per Ordinary share^{1} | 105.86p | 118.94p | (11.0)  |
|  Discount to NAV^{1} | 8.4% | 15.1% |   |
|  Gross assets^{1} | £163.3m | £219.1m | (25.5)  |
|  Net assets | £150.8m | £199.1m | (24.3)  |
|  Market Capitalisation | £138.2m | £169.1m | (18.3)  |
|  Net gearing employed^{1} | 5.2% | 2.7% |   |

|  Year ended 31 March | 2025 | 2024 | % change  |
| --- | --- | --- | --- |
|  Revenue return per Ordinary share | 3.3p | 3.2p | 3.1  |
|  Dividends per Ordinary share | 5.4p | 4.6p | 17.4  |
|  Ongoing charges^{1} | 0.9% | 0.9% |   |
|  Portfolio turnover^{1} | 45.6% | 23.4% |   |

$^{1}$ Details provided in Alternative Performance Measures on pages 64 to 65.

$^{2}$ The Benchmark is a composite index with the NSCI used since 1 April 2013.

$^{3}$ This represents the Benchmark with the NSCI including AIM used since 1 April 2013.
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025

page 3

# Chairman's Statement

![img-0.jpeg](img-0.jpeg)

I am pleased to present the annual report of MUSCIT for the year ended 31 March 2025. This year also marks MUSCIT's 30th anniversary.

## Results

In the year to 31 March 2025, the Net Asset Value ("NAV") total return of MUSCIT decreased by 6.9%. In comparison, the Numis Smaller Companies Index (excluding investment companies) (the "NSCI") gained 2.3% and the NSCI including AIM decreased by 0.4%.

During the same period, the share price of MUSCIT returned 1.0% as the discount tightened from 15.1% to 8.4%. Compared with the NSCI including AIM, MUSCIT's Share Price *outperformed* by 1.4%.

Since inception in 1995, the Company has delivered a cumulative NAV total return of 809%, significantly outperforming the composite benchmark which delivered a return of 571%.

## Dividends

The Board believes it is important that the Company's dividend policy continues to play a key role in attracting new investors and, in doing so, helps to narrow the discount.

While the Company's primary investment objective and focus remain capital growth – and this has not changed – the Board recognised the evolving interest rate environment.

**In December 2024, the quarterly dividend was increased from 1% to 1.5% of the Company's NAV, equivalent to an annual yield of approximately 6%.**

Based on the current discount of 8.4%, this implies a share price yield of 6.5%. **This would place MUSCIT in the top 10 highest-yielding UK equity trusts out of over 400 and one of only seven strategies offering yields in excess of 6%** (Source: Quoted Data).

Quarterly dividends continue to be calculated on the NAV on the last business day of the preceding financial quarter, being the end of March, June, September and December.

During the Financial Year, the Company paid four quarterly dividends amounting to a total of 5.43p per share, equivalent to 5.4% of the share price at the start of the year and 5.6% at the end of the period.

The Company holds substantial reserves which are available for distribution in future.

## Costs

The Board remains highly focused on reviewing and managing costs. Effective from 31 December 2024, the investment management fee of 0.50% per annum is now calculated based on net assets rather than gross assets. The fee remains one of the most competitive within the UK SmallCap investment trust sector.

In addition, the Board conducts regular reviews of all service providers to ensure that fees remain competitive and at least aligned with market standards.

We are pleased to report that the Company's Ongoing Charge has remained stable at 0.9%, despite a decrease in net assets during the Financial Year.

## Share Buybacks

The Board is responsible for share buy-backs which are undertaken at arms' length from the Manager. These are regularly considered by the Board and implemented when considered to be in the interests of shareholders as a whole.

**In recognition of changing market dynamics, the Board confirmed its commitment to an active buyback policy, with the view to maintaining the discount in single digits in normal market conditions.**
page 4

Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025

## Chairman's Statement continued

The share buyback authority was renewed at a General Meeting held on 31 March 2025.

During the financial year, the Company bought back 24,927,148 shares (14.9% of outstanding shares) which are held in Treasury.

In addition, during the life of MUSCIT, the Company has bought back and cancelled 29% of the shares outstanding.

### Discount

Over the last financial year, the discount of MUSCIT's share price to NAV, as shown in the graph on page 4, narrowed from 15.1% to 8.4%.

The Board and the Manager have worked hard to make MUSCIT attractive to private clients, including implementing a five-for-one share split in 2018; twice enhancing its dividend policy; reducing costs and increasing the focus on marketing. These initiatives are bearing fruit, with a growing number of retail investors now appearing on the share register. Over time, this broader ownership base should help to reduce discount volatility in MUSCIT's shares.

### Gearing

The Board, in consultation with the Manager, regularly reviews the gearing strategy of the Company and it approves the arrangement of any gearing facility. The ability to issue debt to gear the portfolio is a key feature of investment trusts that we believe offers a strong competitive advantage over open-ended investment funds. Gearing can enhance investment returns to shareholders. The Board strongly encourages the Manager to actively use the gearing facility while delegating the decision on optimum levels to their discretion.

On 17 December 2024, the borrowing facilities were renewed with BNY Mellon for a period of two years. The interest rate on the £30 million revolving credit facility is calculated as the prevailing SONIA rate plus 1.3% (the bank margin).

At 31 March 2025, net gearing was 5.2%, a level that the Manager considered to be appropriate in light of the macroeconomic uncertainty and volatility in financial markets at that time.

### Environmental, Social and Corporate Governance ("ESG")

The Board and Montanaro believe there is a strong correlation between how well a business fares on ESG grounds and the value it creates for its shareholders. This is why ESG considerations form an integral part of the Manager's assessment of a company's "Quality" and have been fully integrated into the investment process for many years.

The depth of Montanaro's commitment is perhaps best exemplified by the fact that they are one of the few UK asset managers to be a certified B Corporation – a certification Montanaro have held since 2019. Certified B Corporations are businesses that meet the highest standards of verified social and environmental performance, public transparency and legal accountability to balance profit and purpose. The certification was renewed for a further three years in 2022. Montanaro's score rose from 81.8 to 105.5 (classified as "outstanding"), demonstrating their commitment to continual improvement.

An ESG Report is included on pages 7 to 8 of this Annual Report.

### Share Price Discount to NAV*

![img-1.jpeg](img-1.jpeg)

* Discount based on NAV over the last ten years.

Source: Montanaro Asset Management, Bloomberg.
Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025 page 5
AGM Nonetheless, as we look ahead, there are reasons for
The Annual General Meeting will be held on Wednesday, cautious optimism. Recent data show that UK GDP growth
23 July 2025 at 10 a.m. at the office of Montanaro Asset in Q1 2025 outperformed expectations, while inflation has
Management, 53 Threadneedle Street, London EC2R 8AR. come in below forecast. As a result, investor sentiment
Shareholders are warmly invited to attend the Meeting where, towards UK equities is perhaps beginning to improve from
after the formal business has been concluded, there will be deeply depressed levels.
an opportunity to meet and ask questions of the Board and
Furthermore, early signs suggest that a potential ‘brain
the Manager.
drain’ from US universities – as international academics and
students look elsewhere – could benefit the UK’s world-
Continuation Vote
leading higher education sector and, over time, the broader
The next Continuation Vote is scheduled to be held in 2027.
economy. UK equity valuations – particularly among smaller
At the AGM held on 12 August 2021, over 99% of shareholders companies – are close to generational lows compared to
voted in favour of continuation of the Company for a further other major markets, while global investor allocations to UK
fiveyears. equities remain exceptionally low. A combination of attractive
valuations and improving sentiment could set the stage for a
Directors’ Fees meaningful reappraisal of UK equities in the years ahead.
In light of the adjustments to the investment management
Against this backdrop, we remain confident that our portfolio
fee and reduced NAV of the Company, the Board has agreed
of high-quality, resilient smaller companies – of which the
to reduce Directors’ remuneration by 10% from 1 April 2025.
overwhelming majority are unaffected by trade tariffs – offers
This decision reflects the Board’s commitment to managing
attractive opportunities for long-term investors.
the Company’s costs. Directors are encouraged to invest a
proportion of their remuneration in shares of the Company. The Board and the Manager remain focused on delivering
We will continue to review remuneration levels to ensure they strong, sustainable returns while managing risk carefully
remain appropriate and competitive within our peer group. in what continues to be an evolving and unpredictable
environment.
Outlook
The financial year to 31 March 2025 was shaped by
considerable turbulence, both in international relations
ARTHUR COPPLE
and financial markets. The re-election of Donald Trump
Chairman
and the announcement of sweeping tariffs – dubbed
“Liberation Day” measures – shocked the global economy,
16 June 2025
heightening volatility and damaging investor confidence.
These developments have added considerable uncertainty
to the global outlook and are reshaping established trading
relationships in ways that are still unfolding.
Closer to home, the UK faced its own challenges. The
Budget announcements in November 2024 and again in
March 2025 were generally poorly received by the business
community, with tax and minimum wage increases viewed
as disappointing. These measures weighed on domestic
sentiment and contributed to a difficult environment for UK
smaller companies in particular. Growth companies faced the
additional headwind of rising bond yields.
page 6 Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025
## Manager’s Report
The Attractions of Quoted UK Smaller Companies (“UK SmallCap”)
The key attraction of investing in quoted smaller companies £1 invested in UK large companies in 1954
is their long-term record of delivering higher returns to
would now be worth £1,530 whereas the same
investors than large companies. In the UK, over the last
£1 invested in UK smaller companies would
70years, this has amounted to an average of 3.1% per
now be worth £10,040 – almost seven times
annum (the “SmallCapEffect”).
more (see chartbelow).
Cumulative Nominal Return of £1 invested on 1 January 1955 (to 31 December 2024)
11,000
10,000 £10,040
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
£1,530
1,000
0
55 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 2256 58 60 62 64 66 24
Numis Small Cap ex-IC Numis Small Cap (ex-IC): +14.1% p.a.
Numis Large Cap Numis Large Cap: +11.0% p.a.
Small Cap Effect = 3.1% p.a.
The market for UK smaller companies is inefficient. While and 16 Analysts and Portfolio Managers, which gives us the
some large companies are analysed by more than 50 brokers, breadth of resources to conduct thorough in-house research.
many smaller companies have little or no coverage. We
At 31 March 2025, we were looking after around £3 billion of
believe that this makes it easier for those with a high level
client assets.
of internal resources to identify attractive, undervalued and
overlooked investment opportunities. This in turn makes it
Investment Philosophy and Approach
possible to deliver long-term performance over and above
We specialise in researching and investing in quoted smaller
that of the benchmark.
companies.
Montanaro Asset Management We have a disciplined, two-stage investment process. Firstly,
Montanaro was established in 1991. We have one of the we identify “good businesses” within our investable universe.
largest and most experienced specialist teams in the UK In the second stage, we determine the intrinsic value of each
dedicated exclusively to researching and investing in quoted company to ensure they will make a “good investment” (the
smaller companies. Our team of 37 includes 11 nationalities two are not always the same).
Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025 page 7
When we consider that we have identified a potentially Once a company has been added to the portfolio, our
“good” company, it must pass our stringent Quality and ESG Analysts conduct ongoing reviews. We will sell a holding if we
Checklists and be approved by our Investment Committee believe that the company’s underlying quality is deteriorating
before it can be added to our “Approved List”. ESG has been or if there has been a fundamental change to the investment
integrated within our disciplined investment process for case or indeed management. We will get things wrong and
almost three decades. Only the most attractive companies make mistakes, but we try to learn from them.
make it on to the Approved List and it is from these that we
In summary, we invest in well managed,
construct your portfolio.
focused, high quality, growing companies
Our in-house team of Analysts are sector specialists and one
bought at sensible valuations.
of the largest specialist teams in the country. Utilising their
industry knowledge and a range of proprietary screens, they
We keep turnover and transaction costs low and follow our
are continually searching for new ideas. With around 1,600
companies closely over many years. We would rather pay more
quoted companies in the UK to choose from, we are spoiled
for a higher quality, more predictable company that can be
for choice.
valued with greater certainty.
We look for high quality companies in markets that are
Environmental, Social and Governance (“ESG”)
structurally growing and simple to understand. They must
Montanaro became a certified B Corporation in 2019,
be profitable; have good and experienced management;
placing sustainability at its core. This was achieved by
deliver sustainably high returns on capital employed; enjoy
meeting verified standards of social and environmental
high and ideally growing profit margins reflecting pricing
performance, transparency and accountability. It is regarded
power and a strong market position; and provide goods and
as one of the toughest sustainability standards to achieve
services that are in demand and likely to remain so. We like
globally. Montanaro recertified for “B Corp” status in 2022
focused companies that are well-established with a long
and achieved a score of 105.5, well above the 81.8 originally
history so that we can see how they perform over different
achieved in 2019 and an achievement of which we are proud.
cycles. Ideally, they should deliver self-funded organic
growth rather than rely on acquisitions and stick firmly to Montanaro has a long track record of sustainable investing
their core areas of expertise. which has always been reflected in the way the portfolio has
been managed. Ethical restrictions mean that we do not
Conversely, we avoid those with stretched balance sheets;
invest in companies that generate a significant proportion
poor free cash flow generation; incomprehensible or heavily
of sales from products with negative societal impact such
adjusted accounts; unproven or unreliable management;
as tobacco, gambling, alcohol, high-interest-rate lending
structurally challenged business models with stiff
and fossil fuels. Similarly, we do not invest in companies
competition; and “special situations” or recovery companies.
that conduct animal testing, unless it is required by law for
We believe that a deep understanding of a company’s
healthcare or regulatory purposes.
business model and the way it is managed are essential. We
The analysis of ESG factors has long formed part of our
meet or speak to our investee companies on a regular basis,
definition of a company’s “Quality”. The analysis of such
typically after they announce their semi-annual or annual
information allows us to better understand the risks – and
figures. Site visits are particularly useful. They allow us to
opportunities – that our companies may be exposed to, from
meet management in situ when they can give us more time
factors such as climate change, supply chain risks and the
and we can talk to more people. Investing in small companies
structure of company boards.
is all about meeting the executive team. It is a privilege for us
and where we can add most value. MUSCIT was awarded an ‘AA’ rating for its ESG credentials
by MSCI – the second best rating out of a possible seven –
Management’s past track record is examined in detail as we
placing it among the highest-rated funds in its category.
seek to understand their goals and aspirations. In smaller
companies, the decisions of management can make or break In March 2022, Montanaro won “the Best Small & Mid-Cap
a company (which is why meeting them is so important). Sustainable Investment Boutique” award from Ethical Finance.
We look closely at the board structure; the level of insider This recognised Montanaro’s continuing commitment to
ownership; and carefully examine remuneration and sustainable investing within its own business, across the
corporate governance policies. investment industry and in our investment process. We were
delighted to receive this award again in 2024.
page 8

Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025

# Manager's Report continued

### Examples of Recent Investee Company Engagement

We continued our active engagement with portfolio companies over the past year, focusing on areas such as environmental transparency, executive pay, and sustainability reporting.

As part of the 2024 CDP Non-Disclosure Campaign, we engaged with **Hilton Foods** to discuss how they could improve their environmental reporting. In previous years, the company had not responded to CDP requests for disclosure. Our discussions were constructive as always. Subsequently, they completed all three CDP questionnaires covering climate change, water security and deforestation. This marks a significant step forward and shows the company's growing commitment to sustainability and investor transparency.

We took part in a shareholder consultation with **discoverIE** regarding proposed changes to its executive pay structure, including increases to performance-based long-term incentives. Our engagement focused on ensuring a clear link between reward and long-term value creation. The company provided reassurance on how performance metrics were being designed to align with shareholder interests. After a thorough review, we voted in favour of the proposals at the AGM.

### How to Invest

We have dedicated a great deal of time to make MUSCIT readily available to all investors. We have continued to grow our presence across the UK's investment platforms and are delighted to see a steady increase, year after year, in MUSCIT's retail following.

Together with the Board, we have appointed Marten & Co to provide sponsored research. The latest report published in May 2025 is available here: https://quoteddata.com/research/montanaro-uk-smaller-companies-high-growth-bigger-yield-mc/

For further details about how to invest, please refer to the following website: https://montanaro.co.uk/trust/montanaro-uk-smaller-companies-investment-trust/

### The Portfolio

On 31 March 2025, the portfolio consisted of 40 companies of which the top ten holdings represented 41% (2024: 46%) of the portfolio by value. MUSCIT held 8 companies traded on AIM representing 16% of the Portfolio by value (2024: 21%).

Sector distribution within the portfolio is driven by stock selection. Although weightings relative to the market are monitored, overweight and underweight positions are held based on where the greatest value and upside are perceived to be.

### Gearing

The Board is responsible for setting the Company's gearing strategy and approves the arrangement of any borrowing facilities. The Manager is responsible for determining the gearing level within parameters set by the Board. On 31 March 2025, gearing stood at 5.2%.

### Performance Review

In the year ended 31 March 2025, the NAV decreased by 6.9% in comparison with the benchmark gain of 2.3%. Including AIM, the benchmark was flat. Style proved a headwind: Growth underperformed Value by 8% last year, accounting for the underperformance.

During this period, the share price of MUSCIT returned 1.0% as the discount narrowed from 15.1% to 8.4%. Compared with the NSCI including AIM, MUSCIT's share price *outperformed* by 1.4%.

Since its launch in March 1995, MUSCIT has delivered an average annualised NAV return of 7.6% p.a. (including dividends reinvested), outperforming the composite benchmark by 1.1% p.a.. This is a cumulative NAV total return of 809%, significantly outperforming the composite benchmark return of 571%.

### Performance Attribution

The largest positive contributors over the period were:

**XPS Pensions**, a leading provider of pension administration and consulting services, continued its strong run. Demand for expert advice remains high following the LDI crisis caused by Liz Truss's mini-budget in September 2022. The group has been gaining market share through new client wins and awards. This is the second year in a row that XPS has been among our top performers.

**Games Workshop**, the fantasy miniatures company behind Warhammer, delivered impressive results once again. A growing global fanbase, successful new product launches, and expanding royalty income from licensing deals – including with Amazon – all contributed to investor enthusiasm. The business remains highly profitable and cash generative with a strong dividend track record.

**Raspberry Pi**, a Cambridge-based semiconductor company and educational computing pioneer, made a successful debut on the London Stock Exchange. We participated in the IPO (see below). Early trading has been encouraging and in line with market expectations.

As ever, the year was not without some disappointments. The largest detractors were:
Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025 page 9
Tracsis, a provider of software and services to the transport launched the first credit card-sized computer boards in
industry, saw its shares weaken after failing to secure any 2012, priced at under £15, hoping schools would use
large train orders in America that had been anticipated. them to teach coding. They caught on fast: first with kids
Atthe time of writing, the shares are trading on c.11x forward and hobbyists; later with engineers and OEMs. Today,
earnings, which suggests to us that the news has been fully Raspberry Pi is a global business selling into both education
discounted by the market. The share price has been quietly andindustry.
rallying since the end of the financial year.
The IPO prospectus was one of the cleanest I have ever
4imprint, the direct marketer of promotional products read. It passed the key tests: management were not selling
in the US, gave back some of its previous strong gains. As a single share (always “follow the money”); they retained a
most of their products are sourced from China, investors meaningful 5% stake; they had impressive backers such as
became concerned about the impact of trade tariffs and the ARM and Lansdowne who were cornerstone investors; Sony
likelihood of price increases that might result. One of our top Semiconductor was already involved. Most importantly,
performers last year, 4imprint remains a core holding and the main seller was the Raspberry Pi Foundation – not
has one of the best management teams we have the privilege private equity – and proceeds would continue to support its
to know. charitable mission.
YouGov, the international market research and data analytics The company ticked every MUSCIT box: c.£500 million market
company, issued a profit warning following operational cap (too small for the index-huggers and big institutions),
missteps, including delayed project delivery and cost profitable and growing fast. From 2021 to 2023, revenues
overruns. So soon after a large acquisition, management rose by over 90% and operating profits had more than
credibility was sufficiently in doubt that we sold the holding. doubled. We had a long meeting with management who are
Subsequently, the Chief Executive stood down. passionate, open and trustworthy. We felt it would be priced
attractively. There were too many people who had a vested
Case Study – Raspberry Pi interest in a successful outcome.
This year saw us participate in the IPO of Raspberry Pi –
The IPO was around 10 times oversubscribed. Half the
our first for MUSCIT since Auction Technology Group in
institutions walked away empty handed. Fortunately, we
February 2021. IPOs are rare for us. We prefer companies
received an allocation which we quickly increased to our
with a long track record on the public market, not least
target weight. Raspberry Pi listed at £2.80 on 10 June 2024
because listing is a gruelling process. The obligations once
and has since more than doubled. Such successes are rare
public are considerable. Add in fund managers like us asking
but in this instance all the stars were aligned. A founder-led,
endless (and probably quite annoying) questions and you can
mission-driven, profitable UK technology company, backed
understand why some founders choose to stay private.
by long-term sophisticated investors built for the long
But we do like a good prospectus. The trick, as ever, is to read term at a time when the London Stock Exchange needed
it from the back – litigation, accounting adjustments, related something to shout about.
party transactions, etc. are all buried at the end. Most don’t
There is a postscript. Whilst reading the prospectus, I spotted
have the stamina to read every page to the last. We do.
a familiar name: David Braben, one of the co-founders, is also
In 2024, just 17 companies came to market in the UK – down Chairman of Frontier Developments, a company we’ve known
96% from the 2005 peak. But this could not go on. Private for many years. I gave him a call. As ever, some of the most
equity needed exits. Bankers needed bonuses. The London valuable insights come not from broker notes, prospectuses or
Stock Exchange needed a win. Step forward: Raspberry Pi. roadshows but rather from relationships built over decades.
Founded in Cambridge, Raspberry Pi began as an
This is what UK SmallCap is all about.
educational charity to inspire the next generation of
Raspberry Pi reminds us why it is so exciting
computer programmers. Eben Upton and colleagues
and rewarding.
page 10 Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025
## Manager’s Report continued
Outlook
UK equities as a whole are trading at just 12x earnings, one of the cheapest global stock markets. UK SmallCap is even
cheaper, languishing at around 10x depressed profits (see chart below).
SmallCap – 12-month Forward P/E
(Deutsche Numis Smaller Companies ex-IC Index)
20
18
16
14
12
10.5x
10
8
6
4
06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
For long-term investors, this has the hallmarks of a before in our lifetime. As the risk premium on US equities
generational buying opportunity. rises, capital is beginning to search for alternative homes. The
UK is on the radar once again.
We are not alone in this view. Around the world, the
investment community is reassessing its exposure to Wall Consensus earnings for UK SmallCap companies forecast
Street. The return of Donald Trump and “Liberation Day” a rise of over 17% in 2025, outpacing larger peers by some
politics have reignited concerns around deficits, US dollar margin. The combination of a valuation discount and an
stability and the sustainability of the dominance and so called improving earnings outlook bodes well. Currently, UK smaller
“excellence” of America. Is it still a reliable trading partner? It companies are unloved and under-owned. Over the past
may no longer be the obvious safe haven for investors – Wall thirty years, we have seen sentiment change dramatically
Street underperformed the rest of the world by 10.5% in the almost overnight – March 2003 and March 2009 come to
first quarter of 2025, the most in 23 years. This is remarkable mind – which heralded several years of strong returns. It pays
and may signal a change in the world order never seen to remain patient and keep the faith.
CHARLES MONTANARO
16 June 2025
Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025 page 11
## Ten Largest Holdings
### as at 31 March 2025
### 1. discoverIE
A global electronics group designing customised components for industrial
applications. Its high-margin, design-led model and exposure to structural
growth markets such as renewables and automation make it a compelling
long-term compounder.
### 2. XPS Pensions
A leader in pension consultancy and administration, XPS is well positioned
to grow as regulation drives demand for independent, expert advice. Its
scalable model and market share gains support long-term, structural growth.
XPS won the John Lewis Pension Fund last year with 165,000 members, the
largest in the company’s history.
### 3. Big Yellow
Big Yellow is the UK’s leading self-storage provider with over 100 stores
nationwide and a focus on London and the South East. Demand is driven by
decluttering, moving, home improvements, student storage, travel, business
needs and life events (“death, divorce and downsizing”). Since listing in 2000,
it has achieved consistent earnings and dividend growth with annualised
total shareholder returns of 13.6%.
### 4. Hilton Foods
A global food packaging business partnering with leading supermarkets such
as Tesco, Woolworths (Australia) and the Co-op. Innovation in sustainable
packaging and plant-based products, plus geographic expansion such as
in Saudi Arabia, support strong growth. Walmart have just announced a
$6.5 billion landmark investment in Canada where they will be working with
HiltonFoods.
### 5. Telecom Plus
Trading as Utility Warehouse, TelecomPlus bundles energy, broadband,
mobile and insurance into a one-stop shop proposition. Its unique referral
model fuels customer growth, with rising energy costs enhancing its relative
value proposition. It has over one million customers in the UK.
page 12 Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025
## Ten Largest Holdings continued
### as at 31 March 2025
### 6. Baltic Classifieds
BCG are the dominant classifieds business in the Baltics, operating 14 online
portals across autos, real estate, jobs, services and generalist verticals. High
margins and pricing power, strong network effects and digital transition
underpin its exceptional profitability and scalability. Each resident in the
Baltics, on average, visits BCG sites 10 times per month.
### 7. Porvair
Specialising in filtration for environmental and industrial markets, Porvair
benefits from global regulations and decarbonisation trends. Its niche
technologies serve mission-critical applications with high barriers to entry.
### 8. 4imprint
4imprint is the leading direct marketer of promotional products in the USA,
Canada, the UK and Ireland offering more than 43,000 products. They hold a
2% market share in a highly fragmented market indicating substantial room
for growth to compete successfully with Amazon.
### 9. Bytes Technology
One of the UK’s largest software resellers, Bytes provides IT solutions
including software licensing, security, cloud services and digital
transformation across public and private sectors. They have strong vendor
relationships including with Microsoft (about half of sales) winning awards
such as “Microsoft Partner of the Year”. High cash generation and increasing
cloud adoption support continued growth.
### 10. JTC
A global fund and corporate services provider with a strong M&A track
record. Its client-first culture and scalable platform deliver high recurring
revenues and consistent margin expansion.
Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025 page 13
## Twenty Largest Holdings
### as at 31 March 2025

|  |  |  |  |  | % of |  | % of |
| --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  | portfolio |  | portfolio |  |
|  | Value | Market cap |  | 31 March |  | 31 March |  |
| Holding Sector | £’000 |  | £m |  | 2025 |  | 2024 |

discoverIE Electronic and Electrical Equipment 8,160 518 5.2 4.6
XPS Pensions Investment Banking and Brokerage Services 7,500 778 4.8 3.9
Big Yellow Real Estate Investment Trusts 7,456 1,827 4.7 5.2
Hilton Foods Food Producers 7,004 738 4.4 3.1
Telecom Plus Electricity 6,090 1,375 3.9 –
Baltic Classifieds Software and Computer Services 6,010 1,466 3.8 –
Porvair Integrated Engineering 5,780 315 3.7 3.8
4imprint Media 5,550 1,042 3.5 5.4
Bytes Technology Software and Computer Services 5,456 1,165 3.5 3.1
JTC Industrial Support Services 5,448 1,507 3.5 –
MP Evans Food Producers 5,050 538 3.2 2.0
Cranswick Food Producers 4,905 2,644 3.1 4.0
Bloomsbury Media 4,410 480 2.8 –
Gamma Communications Telecommunications Service Providers 4,242 1,161 2.7 –
Games Workshop Leisure Goods 4,197 4,610 2.7 4.9
Integrafin Software and Computer Services 3,825 1,014 2.4 –
Cerillion Investment Banking and Brokerage Services 3,813 450 2.4 1.9
Watches of Switzerland Personal Goods 3,721 990 2.4 1.3
NCC Group Software and Computer Services 3,684 436 2.3 2.1
Marshalls Construction and Materials 3,675 620 2.3 4.7
Twenty Largest Holdings 105,976 67.3
All investments are in ordinary shares.
As at 31 March 2025, the Company did not hold any equity interests in excess of 3% of any investee company’s share capital.
page 14

Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025

## Analysis of Investment Portfolio by Industrial or Commercial Sector as at 31 March 2025

|  Sector | 31 March 2025 |   | 31 March 2024  |   |
| --- | --- | --- | --- | --- |
|   |  % of portfolio | % of NSCI | % of portfolio | % of NSCI  |
|  Software and Computer Services | 14.7 | 5.4 | 16.6 | 6.6  |
|  Technology Hardware and Equipment | 1.8 | 1.2 | – | 1.2  |
|  **Technology** | **16.5** | **6.6** | **16.6** | **7.8**  |
|  Telecommunications Equipment | – | 0.8 | 1.5 | 0.8  |
|  Telecommunications Service Providers | 2.7 | 0.8 | – | 2.7  |
|  **Telecommunications** | **2.7** | **1.6** | **1.5** | **3.5**  |
|  Health Care Providers | 2.1 | 0.5 | 1.8 | 3.0  |
|  Medical Equipment and Services | – | 0.1 | – | 0.1  |
|  Pharmaceuticals and Biotechnology | – | 2.6 | – | 0.7  |
|  **Health Care** | **2.1** | **3.2** | **1.8** | **3.8**  |
|  Banks | – | 2.4 | – | 2.9  |
|  Finance and Credit Services | – | 3.0 | – | 1.7  |
|  Investment Banking and Brokerage Services | 13.3 | 8.8 | 7.0 | 12.2  |
|  Life Insurance | – | 1.4 | – | 1.1  |
|  Non-life Insurance | – | 1.6 | – | 2.0  |
|  **Financials** | **13.3** | **17.2** | **7.0** | **19.9**  |
|  Real Estate Investment and Services Development | – | 3.9 | – | 3.0  |
|  Real Estate Investment Trusts | 8.4 | 7.1 | 8.7 | 5.5  |
|  **Real Estate** | **8.4** | **11.0** | **8.7** | **8.5**  |
|  Automobiles and Parts | – | 1.7 | – | 1.3  |
|  Consumer Services | – | 0.1 | – | 0.1  |
|  Household Goods and Home Construction | – | 1.9 | – | 0.8  |
|  Leisure Goods | 4.7 | 0.6 | 5.2 | 0.4  |
|  Personal Goods | 2.3 | 1.0 | 1.2 | 1.2  |
|  Media | 6.3 | 2.3 | 10.2 | 2.8  |
|  Retailers | – | 4.5 | – | 4.0  |
|  Travel and Leisure | – | 6.3 | – | 7.3  |
|  **Consumer Discretionary** | **13.3** | **18.4** | **16.6** | **17.9**  |
|  Beverages | – | 0.8 | – | 0.9  |
|  Food Producers | 10.8 | 3.4 | 9.1 | 2.6  |
|  Personal Care, Drug and Grocery Stores | 1.1 | 0.8 | 4.6 | 1.1  |
|  **Consumer Staples** | **11.9** | **5.0** | **13.7** | **4.6**  |
|  Construction and Materials | 4.6 | 6.6 | 7.4 | 6.5  |
|  Aerospace and Defense | 1.2 | 1.4 | – | 1.5  |
|  Electronic and Electrical Equipment | 12.4 | 2.0 | 14.2 | 2.6  |
|  General Industrials | – | 1.3 | – | 1.3  |
|  Industrial Engineering | – | 1.4 | – | 2.2  |
|  Industrial Support Services | 7.8 | 9.3 | 7.6 | 5.1  |
|  Industrial Transportation | 1.9 | 2.6 | 4.9 | 3.6  |
|  **Industrials** | **27.9** | **24.6** | **34.1** | **22.8**  |
|  Industrial Materials | – | 0.1 | – | 0.1  |
|  Industrial Metals and Mining | – | 2.3 | – | 2.2  |
|  Precious Metals and Mining | – | 1.1 | – | 1.5  |
|  Chemicals | – | 2.3 | – | 3.1  |
|  **Basic Materials** | **–** | **5.8** | **–** | **6.9**  |
|  Oil, Gas and Coal | – | 3.9 | – | 3.7  |
|  Alternative Energy | – | 0.1 | – | 0.2  |
|  **Energy** | **–** | **4.0** | **–** | **3.9**  |
|  Electricity | 3.9 | 1.0 | – | 0.1  |
|  Waste and Disposal Services | – | 0.5 | – | 0.1  |
|  Gas, Water and Multi-utilities | – | 1.1 | – | 0.2  |
|  **Utilities** | **3.9** | **2.6** | **–** | **0.4**  |
|  **Total** | **100.0** | **100.0** | **100.0** | **100.0**  |

The investment portfolio comprises 40 traded or listed UK equity holdings.
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025

page 15

## Business Model and Strategy

The purpose of this report is to provide shareholders with details of the Company's strategy, objectives and business model as well as the principal and emerging risks and challenges the Company has faced during the year under review. It should be read in conjunction with the Chairman's Statement on pages 3 to 5 and the Manager's Report on pages 6 to 10, which provide a review of the Company's investment activity and a look to the future.

The Board is responsible for the stewardship of the Company, including overall strategy, investment policy, borrowings, dividends, corporate governance procedures and risk management. Biographies of the Directors can be found on pages 25 and 26.

### PRINCIPAL ACTIVITY

The Company carries on business as an investment trust and its principal activity is portfolio management. Its Ordinary shares are traded on the Main Market of the London Stock Exchange.

The Company has no employees but contracts investment management and administration to appropriate external service providers, who are subject to oversight by the Board of Directors. The principal service providers during the year were:

- Montanaro Asset Management Limited ("Montanaro" or the "Manager"), which was appointed as Investment Manager and the Company's Alternative Investment Fund Manager ("AIFM").
- Juniper Partners Limited ("Juniper", the "Administrator" or the "Company Secretary"), which provided company secretarial and fund administration services.
- The Bank of New York Mellon (International) Limited which provided depositary and custodian services.
- MUFG Corporate Services (formerly Link Group) which provided registrar services.

### STATUS OF THE COMPANY

The Company was incorporated in England and Wales in 1994 under registered number 3004101 and is domiciled in the United Kingdom and registered as an investment company as defined in section 833 of the Companies Act 2006.

The Company has been approved by HMRC as an investment trust under Sections 1158 and 1159 of the Corporation Tax Act 2010, subject to continuing to meet eligibility requirements. The Directors are of the opinion that the Company has conducted its affairs in a manner compliant with the conditions for continued approval and intends to continue to do so. As an investment company that is managed and marketed in the United Kingdom, the Company is an Alternative Investment Fund ("AIF") falling within the scope of, and subject to, the requirements of the Alternative Investment Fund Managers

Directive ("AIFMD"). Further details are provided in the AIFMD Disclosures on page 63.

### INVESTMENT OBJECTIVE

MUSCIT's investment objective is capital appreciation through investing in smaller quoted companies listed on the London Stock Exchange or traded on AIM and to outperform its benchmark, the NSCI.

No unquoted investments are permitted.

### INVESTMENT POLICY

The Company seeks to achieve its objective and to manage risk by investing in a diversified portfolio of quoted UK smaller companies. At the time of initial investment, a potential investee company must be profitable and no bigger than the largest constituent of the NSCI, which represents the smallest 10% of the UK Stock Market by value. At the start of 2025, this was any company below £1.85 billion in size. The Manager focuses on the smaller end of this index.

In order to manage risk, the Manager limits any one holding to a maximum of 4% of the Company's investments at the time of initial investment. The portfolio weighting of each investment is closely monitored to reflect the underlying liquidity of the particular company. The Company's AIM exposure is also closely monitored by the Board and is limited to 40% of total investments at the time of investment, with Board approval required for exposure above 35%.

The Manager is focused on identifying high-quality, niche companies operating in growth markets. This typically leads the Manager to invest in companies that enjoy high barriers to entry, pricing power, a sustainable competitive advantage and strong management teams. The portfolio is constructed on a "bottom up" basis.

The Board is responsible for setting the Company's gearing strategy and approves the arrangement of any gearing facilities. The Manager is responsible for determining the net gearing level within the parameters set by the Board. The Company's borrowings should be limited to 25% of shareholders' funds. Gearing is used to enhance returns when the timing is considered appropriate.

The Company will not invest more than 10%, in aggregate, of the value of its total assets at the time of investment in other investment trusts or investment companies admitted to the Official List of the UK Listing Authority.

All material changes to the investment policy require approval from both the Financial Conduct Authority ("FCA") and shareholders.
page 16 Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025
## Business Model and Strategy continued
KEY PERFORMANCE INDICATORS (“KPIs”) Ongoing charges
At each Board meeting, the Directors review performance The Board reviews the ongoing charges and monitors the
by reference to a number of KPIs. The KPIs considered most expenses incurred by the Company on an ongoing basis.
relevant are those that demonstrate the Company’s success in Full details of how the ongoing charges ratio is calculated is
achieving its objectives. included in the Alternative Performance Measures on page 64.
The principal KPIs used to measure the progress and
THE MANAGER
performance of the Company are set out below:
Established in 1991, Montanaro is a highly experienced
Performance to 31March % specialist investor in quoted smaller companies. It has one
2025 2024 of the largest teams in the UK researching and investing
1
NAV per share total return (6.9) 8.3 exclusively in quoted smaller companies and currently
1

| Share price total return |  | 1.0 0.7 |  | manages circa £3 billion, mainly on behalf of leading financial |
| --- | --- | --- | --- | --- |
|  | 1 |  |  | institutions. Montanaro’s investment philosophy and approach |
| Discount to NAV |  |  | 8.4 15.1 |  |
|  | 1 |  |  | are set out in the Manager’s Report on pages 6 to 10. |
| Ongoing charges | 0.9 0.9 |  |  |  |

1
Alternative performance measures. Please see pages 64 and 65 for further
BENCHMARK
information.
The Company’s benchmark is the Deutsche Numis Smaller
Companies Index (excluding investment companies) (‘NSCI’).
Relative performance %
As a result of the portfolio’s weighting towards AIM traded
2025 2024
companies, the Deutsche Numis Smaller Companies Index
NAV per share total return
(excluding investment companies) including AIM is also
vs benchmark (9.2) (0.7)
referenced throughout the Annual Report for comparison
vs benchmark including AIM (6.5) (2.3)
purposes. However, the Company has not formally adopted
Share price total return
this index as its Benchmark.
vs benchmark (1.3) (8.3)
vs benchmark including AIM 1.4 (9.9)
DIVIDEND POLICY
Performance The Company’s dividend policy is to pay quarterly dividends of
At each meeting, the Board reviews the performance of the 1.5% of the Company’s NAV, which equates to an approximate
portfolio as well as the NAV and share price. Performance yield of 6% per annum.
is reviewed against the benchmark and compared with the
performance of other companies in the peer group. Information DISCOUNT MANAGEMENT
on the Company’s performance is detailed in the Highlights It is the Board’s objective to maintain a stable discount to NAV.
section on page 2. In normal market conditions the Company will buy back its
own shares, as necessary, to maintain a single digit percentage
Share price discount or premium to NAV discount.
The Board monitors the level of the Company’s premium or
discount to NAV on an ongoing basis. The share price discount THE BOARD
to NAV as at 31March 2025 was 8.4%. During the year, the At the date of signing this report, the Company has four
shares traded at an average discount to NAV of 11.9%. Directors. Two are men and two are women.
Further details setting out how the discount or premium at
which the Company’s shares trade is calculated is provided in
the Alternative Performance Measures on page 64.
Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025 page 17
## Principal and Emerging Risks
The Board carefully considers the Company’s principal and The Board considers the Company’s risks under four key
emerging risks and seeks to mitigate them through regular areas: (1) Corporate strategy; (2) AIFM/Investment Manager;
review, policy setting, compliance with and enforcement of (3) Other outsourced service providers; and (4) Breach of
contractual obligations and active communication with the regulation/failure to comply with legal requirements.
Manager, the Administrator and other third party service
A summary of the Company’s risk management and internal
providers. A core element of this process is the Company’s
control processes can be found in the Corporate Governance
risk register which identifies the Company’s key risks, the
Statement on pages 31 to 34. Details of the principal and
likelihood and potential impact of each risk and the tools
emerging risks and how these are mitigated are set out
formitigation.
below. The principal financial risks are summarised in Note 15
During the year under review, the Board carried out a robust to the financial statements.
assessment of the principal and emerging risks facing the
Company, including those that would threaten its business
model, future performance, solvency or liquidity.
Corporate strategy:
Principal and Emerging Risks Mitigation
Discount Management:
The Company’s share price performance lags the NAV The Board regularly reviews:
due to poor performance, or because UK SmallCap is
### • the relative level of discount against the sector;
out of favour.
### • investment performance
The Company may be at risk from arbitrageurs or a sale
– relative to the competition;
from a sizeable shareholder.
– the benchmark; and
Share buybacks could cause the Company to become
### • the share register.
too small to be viable in terms of ongoing charges, or
The Board has taken a number of specific steps to reduce the
for thresholds of institutional investors.
Company’s discount, including the introduction of an enhanced
Continued area of Board focus due to persistent
dividend policy and an active share buyback policy, with a target of
discounts across the investment trust sector and
maintaining the discount in single digits in normal market conditions.
arbitrage activity
Please refer to page 24 for further details.
Poor Investment Performance:
Returns achieved are reliant primarily on the To manage the risk, a review is undertaken at each quarterly Board
performance of the portfolio. Underperformance meeting with the Manager on portfolio performance against the
relative to the benchmark and/or peer group may Company’s benchmark and peer group.
result in a loss of capital together with dissatisfied
The Board will seek:
shareholders.
### • to understand the reasons for any underperformance; and
No change in overall risk in the year
### • comfort over the consistency of investment approach and style.
Ultimately, the Board can terminate the Investment Management
Agreement if unsatisfactory performance is considered irreversible and
the causes cannot be rectified.
The Company’s NAV has underperformed relative to the benchmark
during the year, with value shares outperforming growth shares. Given
that Montanaro is a growth manager, an investment style that has
been out of favour, the Board accepts the rationale for this period of
underperformance.
Gearing:
One of the benefits of an investment trust is its The Manager is responsible for determining the net gearing level within
ability to use borrowings, which can enhance returns the parameters set by the Board.
to shareholders in a rising stock market. However,
investment returns can worsen in falling markets.
No change in overall risk in the year
page 18 Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025
## Principal and Emerging Risks continued
AIFM/Investment Manager:
Principal and Emerging Risks Mitigation
Financial:
The Company’s investment activities expose it to a The liquidity of the portfolio is monitored by the Manager and reported
variety of financial risks that include those relating to to the Board, and market conditions and their impacts areconsidered.
interest rate and liquidity risk.
Further details on these risks are disclosed in Note 15 to the
No change in overall risk in the year financialstatements.
Key Man Risk:
A sudden loss or change in the key investment The Manager operates a team approach in the management of the
management personnel involved in the management of portfolio which mitigates against the impact of the departure of any
the portfolio could impact investment performance and one member of the investment team.
lead to loss of investor confidence.
There is an identified lead manager and designated co-manager within
No change in overall risk in the year Montanaro, offering continuity of communication with the Company’s
shareholders. The Board is in regular contact with Montanaro and
will be asked for their approval to any proposed change in the lead
manager.
Risk Oversight:
The Manager is taking too much risk in the portfolio Risk oversight is primarily the responsibility of the AIFM. The Board also
leading to unacceptable volatility in performance or provides additional oversight through portfolio reviews at each Board
excessive portfolio turnover. meeting. Portfolio turnover is also reviewed at each Board meeting.
No change in overall risk in the year No matters of concern have arisen during the year under review.
Environmental, Social and Governance (“ESG”):
ESG in the context of investing continues to gain ESG considerations are fully embedded in the investment process and
prominence, therefore a consideration of ESG factors the Manager takes these into consideration when reviewing current
when undertaking an investment is vital. Climate and potential investee companies.
change and other ESG matters have had a significant
The Manager is a B Corporation which recognises its high ESG
impact on the performance of different sectors of the
standards and has been awarded various industry awards recognising
stock market and there is a risk of being invested in the
its commitment to ESG.
wrong sectors.
No change in overall risk in the year
Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025 page 19
Other outsourced service providers:
Principal and Emerging Risks Mitigation
Operational Risk:
In common with most other investment trusts, the The Board monitors operational issues and reviews them in detail at
Company has no employees and relies on services each Board meeting.
provided by third parties. It is therefore dependent on
All third party service providers are subject to annual review by the
the control systems of the AIFM, depositary, custodian
Audit and Management Engagement Committee whereby their internal
and administrator who maintain the Company’s assets,
control reports are reviewed.
dealing procedures and accounting records.
The Company’s assets are subject to a liability regime. Unless the
Key operational risks include:
depositary is able to demonstrate that any loss of financial assets held
### • transactions not subject to best execution; in custody was the consequence of an event beyond its reasonable
control, it must return assets of an identical type or the corresponding
### • counterparty risk;
amount.
### • errors in settlement, title and corporate actions;
Business continuity plans are in place at all service providers, with
### • misstatement of NAV; and
disaster recovery tests taking place regularly.
### • breach of the Investment Policy.
No change in overall risk in the year
Cyber Risk:
The threat of cyber attack is regarded as being as The Board monitors the preparedness of its service providers and is
important as more traditional physical threats to satisfied that the risk is given due priority and consideration in Board
business continuity and security. meetings.
The Company has limited direct exposure to cyber The Manager reports to the Board covering cyber risk. The Company
risk. However, the Company’s operations or reputation benefits from the network and information technology controls of the
could be affected if any of its key service providers Manager around the security of data. The Manager has appointed
suffered a major cyber security breach. a specialist IT and cyber monitoring and management provider to
provide continuous monitoring and access to a Cyber Information
Increased area of Board focus following recent high-
SecurityOfficer.
profile cyber attacks on well-known UK companies
The annual review of service providers includes a consideration of
cyber risk. As part of this review, internal controls reports for each
service provider are reviewed to ensure that suitable cyber security
controls are in place.
Administrator:
Daily NAV incorrectly stated. Daily logic checks of the NAVs are undertaken by the AIFM.
Depositary checks are also undertaken daily.
No change in overall risk in the year
All financial information is reviewed by the Board at regular meetings.
The AIFM conducts regular visits to the Administrator.
Pandemics and other unforeseeable events:
The AIFM and the Administrator are unable to manage The AIFM, Investment Manager, and other key service providers, have
or administer the portfolio. appropriate business continuity plans in place in order to continue to
operate effectively during unforeseen events.
No change in overall risk in the year
page 20 Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025
## Principal and Emerging Risks continued
Breach of regulations/failure to comply with legal requirements:
Principal and Emerging Risks Mitigation
Breach of Regulation:
The Company must comply with the provisions of the The Company Secretary and the Company’s professional advisers
Companies Act 2006, the Listing Rules and Disclosure, provide reports to the Board in respect of compliance with all
Guidance & Transparency Rules, the UK Market Abuse applicable rules and regulations.
Regulation and the Alternative Investment Fund
Compliance with the accounting rules affecting MUSCIT is closely
Manager’s Directive. Any serious breach could result in
monitored.
the Company and/or the Directors being fined or the
subject of criminal proceedings. During the year under review, the Company complied with all
applicable rules and regulations including AIFMD and the second
The Company has been accepted by HM Revenue &
Markets in Financial Instruments Directive.
Customs as an investment trust, subject to continuing
to meet the relevant eligibility conditions and operates
as an investment trust in accordance with the
Corporation Tax Act 2010. As such, the Company is
exempt from capital gains tax on profits realised from
the sale of investments. Any breach of the relevant
eligibility conditions could lead to the loss of investment
trust status.
No change in overall risk in the year
Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025 page 21
## Directors’ Duties
SECTION 172 OF THE COMPANIES ACT 2006 DECISION-MAKING
Section 172 of the Companies Act 2006 (the “Act”) requires The importance of stakeholder considerations, in particular
directors to act in good faith and in a way that is most likely to in the context of decision-making, is regularly brought to the
promote the success of the company. In doing so, Directors Board’s attention by the Company Secretary and taken into
must take into consideration the interests of the various account at every Board meeting.
stakeholders of the Company, the impact the Company has
on the community and the environment, take a long-term view COMMUNITY AND ENVIRONMENT
on the consequences of decisions they make as well as aim to Montanaro is a “B Corporation”, abusiness certified for
maintain a reputation for high standards of business conduct meeting the highest verified standards of social and
and fair treatment between the members of the Company. environmental performance, transparency and accountability.
Fulfilling this duty naturally supports the Company in achieving The Board recognises that the Company has certain
its Investment Objective and helps to ensure that all decisions responsibilities to its shareholders, stakeholders and wider
are made in a responsible and sustainable way. Below, the society. While the Company itself does not have employees or
Board explains how the Directors have individually and offices, the Board endorses the Manager’s policy to invest the
collectively discharged their duties under section 172 of the Act Company’s funds in a socially responsible manner. ESG factors
over the course of the reporting period. are an integral part of the investment process. In addition,
the Manager does not invest in companies it deems to be
To ensure that the Directors are aware of and understand their
harmful to society or the environment; this includes companies
duties, they are provided with details of all relevant regulatory
involved in; gambling, alcohol, high-interest-rate lending
and legal duties as a Director of a UK public limited company
and fossil fuels. Similarly they do not invest in companies
when they join the Board and continue to receive regular
that conduct animal testing unless it is required by law for
and ongoing updates and training on relevant legislative and
healthcare or regulatory purposes.
regulatory developments. They also have continued access
to the advice and services of the Company Secretary and, The Board monitors investment activity to ensure that it is
when deemed necessary, the Directors can seek independent compatible with the policy and receives periodic updates from
professional advice. The schedule of Matters Reserved for the the Manager on its initiatives and performance against its
Board, as well as the Terms of Reference of its Committees, ESGgoals.
are reviewed periodically and further describe Directors’
responsibilities and obligations and include any statutory and BUSINESS CONDUCT
regulatory duties. The Matters Reserved for the Board, Board Committees’
Terms of Reference, the Share Dealing Code and other Board
CULTURE
policies are all reviewed on at least an annual basis and the
During the year, the Directors also considered the Company’s
Directors ensure that they appropriately define obligations and
culture and values and have worked to incorporate these
correct procedures. The Report of the Audit and Management
behaviours and processes into the annual review of the
Engagement Committee, which can be found on pages 35 to
Manager, strategic planning, the annual evaluation of
37 of this Report, further explains how the Committee reviews
Board effectiveness and reporting to stakeholders – thus
the risk management and internal controls of the Company.
embedding consideration of stakeholders’ interests, a long-
This includes satisfying itself that relevant systems and controls
term perspective, maintaining reputation for fairness and
in place remain effective and appropriate.
high standards of governance, corporate reporting and
business conduct more generally in the Company’s culture
and processes. The Company’s culture and values are aligned
with ESG goals with further details outlined in the Manager’s
Report on pages 6 to 10 and Business Model and Strategy on
pages 15 and 16.
page 22 Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025
## Directors’ Duties continued
STAKEHOLDERS
The Board seeks to understand the needs and priorities of the Company’s stakeholders and these are taken into account during
all its discussions and as part of its decision-making. While, as an externally managed investment company, the Company does
not have any employees or customers, its key stakeholders include:
Stakeholders Why they are important Board engagement
Shareholders Continued shareholder support The Company has a large and diversified shareholder base. Over
and engagement are critical to the the years, the Company has developed various ways of engaging
existence of the business and the with its shareholders in order to gain an understanding of the views
delivery of the long-term strategy of of our shareholders. These include:
the business.
### • Annual General Meeting – The Company welcomes
attendance from shareholders at its Annual General Meeting,
which is held at the offices of the Manager. All shareholders
have an opportunity to meet the Directors and put questions
to the Manager. A presentation is shared with investors and
made available on the Company’s website for those who are not
attending. The Board greatly values the feedback and questions
it receives from shareholders and takes action or makes
changes as and when appropriate;
### • Company Information – The annual and interim results, as well
as monthly factsheets, are available on the Company’s website.
Feedback and/or questions the Company receives from
the shareholders help the Company to evolve its reporting,
aiming to make the reports and updates transparent and
understandable; and
### • Investor Relations updates – The Manager’s marketing team
meet and speak to shareholders on a regular basis and from
time to time, the Manager takes part in conferences and other
webinars. At every Board meeting, the Directors receive updates
on the share trading activity, share price performance and any
shareholders’ feedback, as well as any publications or comments
in the press.
SERVICE PROVIDERS:
The Manager The Manager’s performance Maintaining a close and constructive working relationship with the
(AIFM) is critical for the Company to Manager is crucial as the Board and the Manager collectively aim
successfully deliver its investment to continue to achieve consistent, long-term returns in line with
strategy and meet its objective. the Company’s investment objective. Important components in the
collaboration with the Manager, which are representative of the
Board’s culture, are:
### • Encouraging open discussion with the Manager; and
### • Recognising that the interests of shareholders and the Manager
are well aligned, adopting a tone of constructive challenge.
Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025 page 23
Stakeholders Why they are important Board engagement
Other service In order to function as an investment The Board maintains regular contact with its key external providers,
providers trust listed on the London Stock both through the Board and Committee meetings, as well as
including: Exchange, the Company relies on a outside of the regular meeting cycle. Their advice, as well as needs
the Company diverse range of advisers to support and views, are routinely taken into account. In addition, the Board
Secretary and it with meeting all of its relevant would expect to meet with all service providers on a regular basis
Administrator, obligations. and the Audit and Management Engagement Committee assesses
the Registrar, their performance at least on an annual basis.
theDepositary,
theCustodian
andthe Broker
Bank Availability of funding and liquidity Considering how important the availability of funding is, the
may be helpful to the Company’s Company aims to demonstrate to lenders that it is a well-managed
ability to take advantage of investment business. In particular, that the Board focuses regularly and
opportunities as they arise. carefully on the management of risk.
Institutional The evolving practice and support of Recognising the principles of stewardship, as promoted by the UK
Investors and the major institutional investors and Stewardship Code, the Board welcomes engagement with all our
Proxy Advisers proxy adviser agencies are important investors. The Board recognises that the views, questions from, and
to the Directors, as the Company aims recommendations of many institutional investors and proxy adviser
to maintain its reputation and high agencies provide a valuable feedback mechanism and play a part in
standards of corporate governance, highlighting evolving shareholder expectations and concerns.
which contributes to the long-term
sustainable success of the Company.

| Regulators The Company can only operate with |  | The Company regularly considers how it meets various regulatory |
| --- | --- | --- |
|  | the approval of its regulators who | and statutory obligations and follows voluntary and best-practice |
|  | have a legitimate interest in how the | guidance. The Company is also mindful of how any governance |
|  | Company operates in the market | decisions it makes can have an impact on its shareholders and |
|  | and treats its shareholders. | wider stakeholders, in the short and in the longer-term. |
| Community and | The Board recognises that it | Details of our engagement with the community and the |
| Environment | has a responsibility to the wider | environment can be found on page 21. |

environment and community.
page 24

Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025

## Directors' Duties continued

### PRINCIPAL DECISIONS DURING THE YEAR ENDED 31 MARCH 2025

Examples of the Board's principal decisions during the year, how the Board fulfilled its duties under section 172(1) of the Act and the related engagement activities are set out below:

|  Principal decision | Stakeholder Considerations and Engagement  |
| --- | --- |
|  **Dividend policy** | The Board updated the Company's dividend policy in 2018, introducing quarterly dividends amounting to 1% of NAV. The resulting annual yield of approximately 4% offered investors an attractive way to earn regular income and helped to broaden the appeal of the Company's shares. However, the Board were aware that the interest rate environment had changed considerably since 2018. At the time of the introduction in the dividend policy, 10-year Gilt yields stood at around 1.3%, comparable gilt yields are currently over 4%. The Board believes that it is important for the Company's dividend policy to continue to fulfil its role of attracting new investors and as a result helping to narrow the discount. Consequently, with effect from 31 December 2024, the Company has paid a regular quarterly dividend equivalent to 1.5% of the Company's NAV. The Board believes that the revised dividend policy is in the best interests of the Company and shareholders as a whole.  |
|  **Investment management fee** | With effect from 31 December 2024, the investment management fee of 0.50% per annum has been calculated based on net assets rather than gross assets. This adjustment reflected the Board's ongoing commitment to delivering value for the Company's investors and follows discussions with shareholders and the Manager. At 0.50% of net assets, the investment management fee remains among the most competitive in the UK SmallCap investment trust sector.  |
|  **Discount control** | Following discussions with a number of shareholders the Company began actively buying back its own shares in January 2025. Further to this, the Board announced on 25 February 2025 that it intends to continue to support shareholders with an active share buyback policy, with a target of maintaining the discount in single digits in normal market conditions. In the year to 31 March 2025, the Company bought back 24,927,148 of its own Ordinary shares at a total cost of £25,270,000. Since the year-end, the Company has bought back a further 13,006,659 shares, at a cost of £13,008,000.  |
|  **Gearing** | The Board strongly encourages the Manager to actively use the gearing facility while delegating the decision on optimum levels to their discretion. On 17 December 2024, the borrowing facilities were renewed with BNY Mellon for a period of two years. The interest rate on the £30 million revolving credit facility is calculated as 1.3% (the bank margin) plus the prevailing SONIA rate. The ability to issue debt to gear the portfolio is a key feature of investment trusts that the Board believes offers a strong competitive advantage over open-ended investment funds.  |

On behalf of the Board

**ARTHUR COPPLE**

Chairman

16 June 2025
Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025 page 25
## Board of Directors
MUSCIT has a highly experienced Board of Directors with extensive knowledge of investment management and investment trusts.
Arthur Copple – Chairman of the Board
Date of Appointment: 1March 2017
Arthur was appointed to the Board as an independent non-executive Director
in 2017 and succeeded Roger Cuming as Chairman on 25July 2019. Arthur has
specialised in the investment company sector for over 30 years. He was a partner
at Kitcat & Aitken, an executive director of Smith New Court PLC and a managing
director of Merrill Lynch.
Relevant skills and experience and reasons for re-election: Arthur served on the
Board of Temple Bar Investment Trust Plc for 12 years and has comprehensive
experience of investment management and the wider investment company sector.
This has provided a strong basis for assessing, and where appropriate challenging,
the Manager on the Company’s performance and in leading the Board in strategic
discussions.
Following a rigorous Board evaluation process, the Board agreed that Arthur
continues to be an effective member of the Board.
Barbara Powley – Senior Independent Director and Chair of the Audit and
Management Engagement Committee
Date of Appointment: 18November 2020
Barbara is a non-executive director of M&G Credit Income Investment Trust plc. She
is a chartered accountant with over 30 years’ experience in the investment trust
industry. Prior to her retirement in March 2018, she was a director in BlackRock’s
closed-end funds team from 2005, with responsibility for the oversight and
administration of BlackRock’s stable of investment trusts. From 1996 to 2005, she
held a similar role at Fidelity.
Relevant skills and experience and reasons for re-election: Barbara has extensive
experience within the investment trust sector, along with significant financial and
accounting experience. Her diverse skill-set facilitates open discussion and allows for
constructive challenge in the boardroom.
Following a rigorous Board evaluation process, the Board agreed that Barbara
continues to be an effective member of the Board.
page 26 Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025
## Board of Directors continued
Catriona Hoare – Non-Executive Director
Date of Appointment: 19November 2019
Catriona joined Meridiem Investment Management (formerly Veritas Investment
Partners Limited) in 2013. In her current role as Deputy CIO, she manages client
portfolios and sits on the firm’s research and investment governance committees.
She was appointed as a director of Meridiem Investment Limited in May 2022.
Catriona started her career at Newton Investment Management where she
managed a number of portfolios and private family unit trusts, with a particular
focus on international clients.
She is a CFA Charterholder, a member of the Chartered Institute For Securities and
Investment and holds a BA (Hons) in History from the University of Bristol.
Relevant skills and experience and reasons for re-election: Catriona’s 17 years
of experience as an investment manager brings valuable investment and portfolio
analysis skills to the Board, which enables her to assess and challenge the Manager
on Company strategy and performance.
Following a rigorous Board evaluation process, the Board agreed that Catriona
continues to be an effective member of the Board.
Yuuichiro Nakajima – Chair of the Nomination and Remuneration Committee
Date of Appointment: 1 January 2024
Yuuichiro is founder and managing director of Crimson Phoenix, a specialist cross-
border corporate finance advisory firm, providing advice on Japan-related M&A
transactions and a range of corporate strategy initiatives from offices in Tokyo,
London and Frankfurt. He is a former member of the executive board of the British
Chamber of Commerce in Japan and of the Council of the Japanese Chamber of
Commerce and Industry in the UK. Yuuichiro spent ten years with S.G. Warburg
(later SBC Warburg) and four years with PricewaterhouseCoopers. He is chairman
of Japan H.L. Limited, which operates Japan House London. For nine years until July
2023, Yuuichiro was a non-executive director of JPMorgan Japan Small Cap Growth
& Income plc.
Relevant skills and experience and reasons for election: Yuuichiro has extensive
experience, knowledge and involvement in the investment trust sector.
Following a rigorous Board evaluation process, the Board agreed that Yuuichiro
continues to be an effective member of the Board.
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025

page 27

# Directors' Report

The Directors present the Annual Report and Accounts of the Company for the year ended 31 March 2025.

For the purposes of compliance with Disclosure Guidance and Transparency Rules ("DTR") DTR 4.1.5 R (2) and DTR 4.1.8 R, the required content of the Management Report can be found in the Strategic Report and this Directors' Report. The following disclosures required to be included in this Directors' Report have been incorporated by way of reference to other sections of this report and should be read in conjunction with this report:

- Corporate Governance Statement – refer to pages 31 to 34 of this report;
- Strategy and relevant future developments – refer to the Chairman's Statement on pages 3 to 5, the Manager's Report on pages 6 to 10; and
- Financial risk management objectives and policies. An analysis of the portfolio along with further information about financial instruments and capital disclosures is provided in Note 15 on pages 60 to 62.

The outlook for the Company is set out in the Chairman's Statement on page 5. Principal and emerging risks can be found on pages 17 to 20, with further information on risk management objectives in Note 15 to the financial statements.

## RESULTS AND DIVIDENDS

The results for the Company are set out in the Income Statement on page 49.

Details of dividends paid and declared in respect of the year, together with the Company's dividend policy, are set out in the Chairman's Statement on page 3 of the report. Further details can also be found in Note 7 on page 56.

## CONTINUATION OF THE COMPANY

The Company's Articles of Association (the "Articles") provide that shareholders should have the opportunity to consider the future of the Company at regular intervals.

The next general meeting for the purpose of considering a voluntary winding up of the Company must be held on or before 16 July 2027. However, an Ordinary Resolution may be passed to release the Directors from the obligation to convene the general meeting and this meeting must be held not more than eighteen months before 16 July 2027.

## DIRECTORS

Biographical details of the Directors, all of whom are independent and non-executive, can be found on pages 25 and 26. The Directors' interests in the shares of the Company are shown on page 40.

## DIRECTOR INDEMNIFICATION AND INSURANCE

In addition to Directors' and Officers' liability insurance cover, the Company's Articles of Association provide, subject to the provisions of applicable UK legislation, an indemnity for Directors.

Indemnities are in force as at the date of this report, and were in force during the year, between the Company and each of its Directors under which the Company has agreed to indemnify each Director, to the extent permitted by law, in respect of certain liabilities incurred as a result of carrying out his or her role as a Director of the Company.

## CONFLICTS OF INTEREST

The Board has approved a procedure for identifying, reporting and addressing conflicts of interest, or potential conflicts, and will regularly review actual or potential conflicts. The Directors are aware that there remains a continuing obligation to notify the Company Secretary of any new conflict that may arise, or any change to a previously notified conflict.

The Board considers that the procedure has worked effectively during the year under review and intends to continue to review all notified conflicts on a regular basis.

## DISCLOSURE OF INTERESTS

No Director was a party to, or had an interest in, any contract or arrangement with the Company. All of the Directors are non-executive and no Director had a contract of services with the Company at any time during the year.

## INVESTMENT MANAGEMENT AGREEMENT

The Board contractually delegated the management of the investment portfolio to Montanaro under an Investment Management Agreement (the "Agreement") dated 19 June 2014. Except in certain circumstances, the Agreement may only be terminated by the Manager on giving 12 months' notice in writing to the Company. The Company shall be entitled to terminate the Agreement by notice in writing to the Manager forthwith, or as at the date specified in such notice.

On receiving such notice, the Manager will be entitled to a termination fee of 1% of the gross assets of the Company at the close of business on the last day of the calendar month immediately preceding the effective date of termination of the Agreement.
page 28

Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025

## Directors' Report continued

### CONTINUING APPOINTMENT OF THE MANAGER

The Board considers arrangements for the provision of investment management and other services to the Company on an ongoing basis. A formal annual review is conducted by the Audit and Management Engagement Committee of all the Company's service providers, including the Manager.

During the year, the Board considered the performance of Montanaro as AIFM and Manager by reference to the investment process, portfolio performance and how it had fulfilled its obligations under the terms of the Investment Management Agreement.

In the opinion of the Board, the continuing appointment of Montanaro as Manager and AIFM, on the terms referenced above, is in shareholders' interests as a whole. The Board is conscious that the short-term performance of the Company has been challenging. However, this is primarily as a result of the Company's investment style being out of favour with the market. On a positive note, the Company's performance is in line with its peer group and long-term performance relative to the benchmark has been strong. We remain encouraged by the depth and experience of the capabilities of Montanaro.

### ALTERNATIVE INVESTMENT FUND MANAGERS DIRECTIVE

In order to comply with the Alternative Investment Fund Managers Directive ("AIFMD"), the Company entered into a Management Agreement with Montanaro dated 19 June 2014 under which the Manager was appointed by the Company to act as the AIFM. Montanaro receives an ongoing fee of £50,000 per annum to act as the Company's AIFM.

The AIFMD requires certain information to be made available to investors in Alternative Investment Funds ("AIFs") before they invest. An Investor Disclosure Document, which sets out this information, is available on the Company's website. There have been no material changes (other than those reflected in this Annual Report) to the information requiring disclosure.

### DEPOSITARY AND CUSTODIAN

The Company is required under the AIFMD to appoint an AIFMD compliant Depositary. The main role of the Depositary is to act as a central custodian with additional duties to monitor the operations of the Company, including its cash flows, and ensuring that the Company's assets are valued in accordance with the relevant regulations and guidance. The Depositary is also responsible for enquiring into the conduct of the AIFM in each annual accounting period.

BNY Mellon Trust & Depositary (UK) Limited ("BNYMTD") was appointed as the Depositary with effect from 22 July 2014. However, with effect from 1 November 2017, the role of Depositary was transferred, by way of a novation agreement, from BNYMTD to its parent company, The Bank of New York Mellon (International) Limited ("BNYM" or the "Depositary"). The annual fee for depositary services is 0.034% per annum where

gross assets are between £0 and £150 million and 0.025% per annum of gross assets above a value of £150 million, subject to a minimum fee of £20,000 per annum.

The Depositary Agreement is subject to 90 days' written notice. The Depositary's responsibilities include cash monitoring, segregation and safekeeping of the Company's assets and monitoring the Company's compliance with investment limits and leverage requirements. Under the depositary agreement, the Depositary has delegated the custodian function to The Bank of New York Mellon SA/NV (London Branch).

### COMPANY SECRETARY AND ADMINISTRATOR

Juniper Partners Limited was appointed as the Company Secretary and Administrator with effect from 1 July 2023. Juniper Partners Limited receives a base annual fee of £145,000 plus 0.02% per annum on Net Assets of up to £1 billion and 0.01% per annum on Net Assets over £1 billion.

The Company Secretarial and Administration Agreement is subject to six months' written notice.

### REGISTRAR

MUFG Corporate Markets has been appointed as the Company's registrar and receives an annual fee of £36,500. This agreement is in effect for a period of five years to July 2026 and is based on an agreed number of shareholders and transfers processed. The Registry Services Agreement may be terminated on not less than six months' notice. The Registrar is also entitled to reimbursement of all disbursements and out of pocket expenses.

### SUBSTANTIAL SHAREHOLDINGS

At 31 March 2025, the Directors were aware of the following substantial shareholdings:

|  Shareholder: | Ordinary shares | % of voting rights  |
| --- | --- | --- |
|  Clients of Hargreaves Lansdown | 15,290,488 | 10.7%  |
|  Derbyshire County Council | 11,996,285 | 8.4%  |
|  Montanaro Asset Management | 10,340,000 | 7.3%  |
|  Clients of Interactive Investor | 9,839,276 | 6.9%  |
|  Clients of A J Bell | 9,123,131 | 6.4%  |
|  Clients of Charles Stanley | 8,382,647 | 5.9%  |
|  West Yorkshire Pension Fund | 8,242,500 | 5.8%  |
|  Clients of Rathbone Investment Management | 6,697,875 | 4.7%  |
|  Charles Montanaro | 5,150,000 | 3.6%  |

On 2 April 2025, the Company was notified that Clients of Charles Stanley now hold 5,266,502 (3.7%) shares in the Company.
Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025 page 29
GOING CONCERN In its assessment, the Board took into account the Company’s
The financial statements of the Company have been prepared current financial position, its ability to meet liabilities as they
on a going concern basis. After reviewing the Company’s fall due and the principal risks as set out on pages 17 to 20. In
forecast projections and actual performance on a regular reviewing the financial position, the following factors were taken
basis throughout the year, the Directors believe that this is the into consideration:
appropriate basis. The Directors consider that the Company
### • the portfolio is comprised solely of cash balances and equity
has adequate resources to continue in existence until at
securities listed or traded on the London Stock Exchange;
least 16June 2026 (being 12 months from the date of signing
### • the current portfolio could be liquidated to the extent of
thisreport).
70% within five trading days and there is no expectation
In performing the assessment of the Company’s ability to that the nature of the investments held within the portfolio
meet its liabilities as they fall due, the Directors took into will be materially different in future;
consideration the following factors: future revenue and expenditure projections:
### •
– the expenses and interest payments of the Company
### • cash balances and the portfolio of readily realisable
are predictable and relatively small; and
securities which can be used to meet short-term funding
commitments; – other than share buy backs, there are no expected
capital outlays.
### • the ability of the Company to meet all of its liabilities and
ongoing expenses from its assets; In addition to considering the Company’s principal risks and
revenue, operating and finance cost forecasts for the the financial position of the Company as referenced above, the
### •
forthcoming year; Directors also took account of the following assumptions in
considering the Company’s longer-term viability:
### • continued adherence to the loan covenants;
### the ability of third-party service providers to continue to • the Board and the Manager will continue to adopt a long-
### •
provide services; and term view when making investments;
### • it is reasonable to believe that the Company will be able to
### • three potential scenarios including stress testing the
renew its credit facilities;
Company’s portfolio for a 30% fall in the value of the
### investment portfolio; a 50% fall in dividend income; and • the Company invests principally in the securities of quoted
maintaining the current dividend and discount policies. UK smaller companies to which investors will wish to
The cumulative impact of these three scenarios would continue to have exposure;
### leave the Company with a negative net cash position, • the Company has a large margin of safety over the
however would have available liquid investments. covenants on its debt;
### • there will continue to be demand for investment trusts;
Based on this assessment, the Directors are confident that
### • the next continuation vote will be in 2027. Further details
the Company will have sufficient funds to continue to meet its
are provided in the Directors’ Report on page 27;
liabilities as they fall due for at least 12 months from the date
of approval of the financial statements, and therefore have • regulation will not increase to a level that makes the running
prepared the financial statements on a going concern basis. of the Company uneconomic; and
### • the performance of the Company will be satisfactory.
VIABILITY STATEMENT
Based on the results of their analysis and in the context of the
In accordance with the AIC Code of Corporate Governance, the
consideration given to the Company’s business model, strategy
Directors have assessed the prospects of the Company over a
and operational arrangements, the Directors have a reasonable
period longer than the twelve months required by the ‘Going
expectation that the Company will be able to continue in
Concern’ provision and reviewed the viability of the Company and
operation and meet its liabilities as they fall due over the five-
its future prospects over the five-year period to 31March 2030.
year period of the assessment.
In the absence of any adverse change to the regulatory
environment and to the treatment of UK investment trusts, the
CAPITAL STRUCTURE
rolling five-year period was determined by the Directors to:
The Company’s Ordinary issued share capital consists of
represent the horizon over which they do not expect there 167,379,790 Ordinary shares, 24,927,148 of these are held
### •
to be any significant change to the Company’s principal risks in Treasury, therefore the total voting rights of the Company
or their mitigation; and is 142,452,642. The Ordinary shares carry the right to receive
dividends and have one voting right per Ordinary share.
### • the period over which they can form a reasonable
expectation of the Company’s prospects.
page 30

Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025

# Directors' Report continued

There are no restrictions concerning the transfer of securities; no special rights with regard to control attached to securities; no restrictions on voting rights; no agreements between holders of securities regarding their transfer known to the Company; and no agreements to which the Company is a party which might change or fall away on a change of control or trigger any compensatory payments for Directors following a successful takeover bid.

The Company's current authorities to buyback and sell shares from Treasury and issue shares will expire at the conclusion of the 2025 Annual General Meeting. The Directors are proposing that these authorities be renewed at the forthcoming Annual General Meeting (see Resolution 13).

## GREENHOUSE GAS EMISSIONS

All of the Company's activities are outsourced to third parties. As such it does not have any physical assets, property, employees or operations of its own and does not generate any greenhouse gas or other emissions or consume any energy reportable under the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013 or the Companies (Directors' Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018, implementing the UK Government's policy on Streamlined Energy and Carbon Reporting.

## CRIMINAL FINANCES ACT 2017

The Board is fully committed to complying with applicable legislation and statutory guidelines, including the UK's Criminal Finances Act 2017, designed to prevent tax evasion in the jurisdictions in which the Company operates.

## DONATIONS

The Company made no political or charitable donations during the year (2024: nil) to organisations either within or outside of the EU.

## UK LISTING RULE 6.6.1 (5)

UK Listing Rule 6.6.1 (5) requires the Company to include specified information in a single identifiable section of the Annual Report or a table cross referencing where the information is set out. With the exception of the item below, no disclosures are required in relation to UK Listing Rule 6.6.1 (5).

**UKLR 6.6.1 (5)** Under the Company's Remuneration Policy, the SID is entitled to an additional fee of £1,250. However, Mrs Powley has waived her entitlement to the additional £1,250. This decision will be kept under review and the Remuneration Policy still allows the flexibility of this additional fee to be paid to the SID.

## FINANCIAL INSTRUMENTS

The Company's financial instruments comprise its investment portfolio, cash balances, bank debt and debtors and creditors that arise directly from its operations, such as sales and purchases awaiting settlement and accrued income. The financial risk management objectives and policies arising from its financial instruments and the exposure of the Company to risk are disclosed in Note 15 to the accounts.

## ANNUAL GENERAL MEETING

The Notice of the Annual General Meeting ("AGM") to be held on Wednesday, 23 July 2025 (the "Notice") is set out on pages 69 to 75.

Resolutions 1 to 11 will be proposed as Ordinary Resolutions and Resolutions 12 to 14 will be proposed as Special Resolutions. Please refer to pages 72 and 73 for a full explanation of all resolutions.

## Recommendation

The Directors consider that the passing of each of the Resolutions to be proposed at the Annual General Meeting is in the best interests of the Company and its shareholders as a whole and they unanimously recommend that all shareholders vote in favour of these Resolutions, as they intend to do in respect of their own holdings.

## INDEPENDENT AUDITOR

BDO LLP ("BDO") has confirmed its willingness to continue in office as the Auditor of the Company (the "Auditor"). A resolution to re-appoint BDO as the Auditor to the Company and to authorise the Audit and Management Engagement Committee to determine the Auditor's remuneration will be proposed to the forthcoming Annual General Meeting.

## DISCLOSURE OF INFORMATION TO AUDITOR

Each of the Directors who held office at the date of approval of this Directors' Report confirm that, so far as they are aware, there is no relevant audit information of which the Company's Auditor is unaware; and each Director has taken all the steps that they ought to have taken as a Director to make themselves aware of any relevant audit information and to establish that the Company's Auditor is aware of that information.

For and on behalf of the Board

**Juniper Partners Limited**

Company Secretary
Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025 page 31
## Corporate Governance Statement
The Corporate Governance Statement forms part of the Directors’ Report.
STATEMENT OF COMPLIANCE 1January 2025 (with the exception of Provision 34 which
The Board has considered the Principles and Provisions of will come into effect for accounting periods beginning on or
the AIC Code of Corporate Governance published in February after 1 January 2026). The Board will review the Company’s
2019 (“AIC Code”). The AIC Code addresses the Principles and governance arrangements to ensure ongoing compliance with
Provisions set out in the 2018 UK Corporate Governance Code the updated AIC Code.
(the “UK Code”), as well as setting out additional Provisions on
The Board has formalised the arrangements under which
issues that are of specific relevance to the Company.
Directors, in the furtherance of their duties, may take
The Board considers that reporting against the Principles independent professional advice. The Company also maintains
and Provisions of the AIC Code, which has been endorsed Directors’ and Officers’ liability insurance. There were no third
by the Financial Reporting Council, provides more relevant party indemnity provisions over the course of the year or since
information to shareholders. the year end.
During the year, the Company has complied with all of the Other than their letters of appointment, none of the Directors
Principles and Provisions of the AIC Code. has a contract of service nor have there been any contracts or
arrangements between the Company and any Director at any
The Company is committed to maintaining the highest
time during the year.
standards of governance and will work to ensure that it
continues to meet all applicable requirements. The Board has engaged external companies to undertake
the Company’s investment management, administrative
The AIC Code is available on the AIC website www.theaic.co.uk.
and custodial activities. Clear, documented contractual
It includes an explanation of how the AIC Code adapts the
arrangements are in place between the Company and its
Principles and Provisions set out in the UK Code to make them
service providers that define the areas where the Board has
relevant for investment companies. The UK Code is available
delegated functions to them. Further details of the Investment
from the Financial Reporting Council’s website at www.frc.org.uk.
Management Agreement are given on page 27. A schedule of
matters specifically reserved to the Board for its decision has
THE BOARD
been adopted. These reserved matters include the approval
As Chairman, Arthur Copple is responsible for leading the
of annual and half-yearly accounts; the recommendation
Board and ensuring its effectiveness in all aspects of its role. In
of dividends; the approval of press releases and circulars;
line with the requirements of the AIC Code, the responsibilities
Board appointments and resignations; and the membership
of the Chairman and the Senior Independent Director (“SID”)
of Committees. Decisions regarding the capital structure of
have been agreed by the Board and are available to view on
the Company (including share buybacks and Treasury share
the Company’s website: www.montanaro.co.uk/trust/muscit
transactions) are also taken by the Board, while the day-to-day
A revised AIC Code was issued in August 2024 and will come investment of the portfolio is delegated to the Manager.
into effect for accounting periods beginning on or after
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
The Company holds at least four Board meetings each year at which the Directors review portfolio investments and all other
important issues in relation to the Company’s affairs. The following table sets out the number of scheduled Board and Committee
meetings held during the year ended 31March 2025 and the number of meetings attended by each Director.
Audit and Management
Board Engagement Committee Nomination and Remuneration
Number of Number of Number of
Number of meetings Number of meetings Number of meetings
meetings held attended meetings held attended meetings held attended
Arthur Copple 4 4 3 3 1 1
Catriona Hoare 4 3 3 2 1 1
Yuuichiro Nakajima 4 4 3 3 1 1
Barbara Powley 4 4 3 3 1 1
The Board also met informally on a number of occasions during the year.
page 32 Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025
## Corporate Governance Statement continued
INDEPENDENCE OF DIRECTORS AND TENURE should be undertaken in the future and notes that this is
The Board has considered the independent status of each not a requirement under the AIC Code given the Company is
Director under the AIC Code and has determined that all outside of the FTSE 350. The Board has taken into account the
Directors are independent. costs and benefits associated with such an exercise and does
not consider the use of external consultants to conduct this
In line with the 2019 AIC Code, the Company has adopted a
evaluation is likely to provide any meaningful advantage over
formal policy on tenure. The Board does not feel that it would
the process that has been adopted. However, the option of
be appropriate to set a specific tenure limit for individual
doing so will be regularly reviewed.
Directors or the Chair of the Board or its Committees.
Instead, under normal circumstances, the Board members,
RE-ELECTION OF DIRECTORS
including the Chair, will be expected to serve a tenure of 9
Under the provisions of the Company’s Articles, the Directors
years, thus preserving the cumulative valuable experience
retire by rotation at least every three years. However, in
and understanding of the Company, while benefitting from
accordance with corporate governance best practice as set out
fresh perspectives and helping to promote diversity. The
in the AIC Code, all Directors should put themselves forward
Board is of the view that length of service will not necessarily
for re-election every year. As such, each of the Directors is
compromise the independence or contribution of Directors of
subject to annual re-election by the shareholders at the Annual
an investment trust company where continuity and experience
General Meeting. All Directors have confirmed that they will
can significantly add to the strength of the Board.
be standing for re-election at the forthcoming Annual General
Meeting.
PERFORMANCE EVALUATION
An annual review of the performance of the Board, its
INTERNAL CONTROL AND FINANCIAL REPORTING
Committees and individual Directors is undertaken by
The Board has delegated responsibility to the Audit and
the Directors. The Board evaluation process comprises a
Management Engagement Committee for establishing and
detailed questionnaire which assesses the performance
maintaining the Company’s risk management and internal
and effectiveness of the Board and each of its Committees.
control processes and for monitoring their effectiveness.
The objective of the evaluation is to obtain constructive
Internal control systems are designed to meet the Company’s
feedback to improve the Board’s effectiveness by highlighting
particular needs and the risks to which it is exposed and
individual and collective strengths as well as development
by their very nature provide reasonable but not absolute
areas. Arthur Copple, as Chairman, takes overall responsibility
assurance against misstatement or loss. The Directors have
for the evaluation process and has selected a questionnaire
reviewed the effectiveness of the system of internal controls,
methodology to achieve these objectives. This is followed
including financial, operational and compliance controls and
by a feedback session that assesses the effectiveness of the
risk management. The Committee will take actions to remedy
process, identifying any areas for improvement. The appraisal
any significant failings or weaknesses identified or make
of the Chairman is led by the Senior Independent Director.
recommendations to the Board, as appropriate. Information
Following review of the Directors’ time commitment and about the Company’s financial risk management objectives
duties, and their contributions and attendance at all Board and policies is set out in Note 15 of the financial statements
and Committee meetings and discussions held outside on pages 60 to 62. The key procedures that have been
these formal meetings, the Board believes that each Director established to provide effective internal controls are as follows:
continues to be effective and demonstrates the necessary
### • throughout the year under review and up to the date of
commitment to the role.
this Annual Report, there has been an ongoing process
The Board considers that outside commitments have not for identifying, evaluating and managing the principal risks
impacted on their duties as Directors and have enhanced the faced by MUSCIT, which complies with guidance supplied
knowledge brought to the Board meetings. by the FRC on risk management, internal control and
related financial and business reporting. This is reviewed
The results of the Board evaluation process were reviewed
on a regular basis by the Audit and Management
and discussed by the Board. Following evaluation, the
Engagement Committee, on behalf of the Board. Details
Board concluded that it had the appropriate balance of
of the principal and emerging risks are set out on pages
skills, experience, and knowledge and that the Board and its
17 to 20. The process involves reports from MUSCIT’s
Committees continued to operate effectively.
Company Secretary and Manager as described below.
No other areas of particular significance or concern were In addition, the Audit and Management Engagement
identified in the performance evaluation. The Board Committee receives internal control reports from all the
considered whether an external performance evaluation third parties to which the Company delegates functions;
Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025 page 33
### • in accordance with guidance issued to directors of listed RELATIONS WITH SHAREHOLDERS
companies, the Board has carried out a review of the The Company welcomes the views of shareholders and places
effectiveness of the Company’s risk management and great importance on communication with its shareholders.
internal control processes. There were no matters arising Please refer to page 22 for details of engagement activity in the
from this review that required further investigation and no year to 31 March 2025.
significant failings or weaknesses were identified; and
EXERCISE OF VOTING RIGHTS IN INVESTEE COMPANIES
### • a risk register is maintained against which the risks
The exercise of voting rights attached to the Company’s
identified and the controls in place to mitigate those risks
portfolio has been delegated to the Manager.
can be monitored. The risks are assessed on the basis
of the likelihood of them happening, the impact on the The Board encourages the Manager to give due consideration
business if they were to occur and the effectiveness of to environmental, social and governance matters whilst
the controls in place to mitigate them. The risk register is recognising the overall investment policy and objectives of the
reviewed at each meeting of the Audit and Management Company. Montanaro votes against resolutions it considers
Engagement Committee, and at other times as necessary. may damage shareholders’ rights or economic interests and
gives due weight to what it considers to be socially responsible
Given the nature of the Company’s activities and the fact that
investments when making investment decisions. However, its
most functions are sub-contracted, the Board has concluded
overriding objective is to produce good investment returns
that there is no need for the Company to have an internal audit
forshareholders.
function. Instead, the Directors obtain information from key
third party suppliers regarding the controls operated by them. During the year, the Manager on behalf of the Company
The key procedures which have been established in relation to exercised its voting authority as follows:
this are as follows:
Meetings
### • investment management is provided by Montanaro
Number of meetings voted at: 44
which is regulated by the FCA. The Board is responsible
Number of meetings voted against management
for setting the overall investment policy and monitors
orabstained: 8
the activity of the Manager at regular Board meetings.
Resolutions
Montanaro provides reports at these meetings, which
Number of resolutions where voted with management: 652
cover investment performance and compliance matters;
Number of resolutions where abstained: 6
### • Juniper Partners Limited (“Juniper”) is responsible for the
Number of resolutions where voted against management: 5
provision of administration duties;
### • company secretarial duties are undertaken by Juniper;
BOARD COMMITTEES
### • depositary services and custody of assets are undertaken
The Chairman of each Board Committee fulfils an important
by BNY Mellon;
leadership role similar to that of the Chairman of the Board,
### • the duties of investment management, accounting and
particularly in creating the conditions for overall Committee
the custody of assets are segregated;
and individual Director effectiveness.
### • the procedures of the individual parties are designed to
complement one another;
Audit and Management Engagement Committee
the Board clearly defines the duties and responsibilities This Committee comprises all Directors and is chaired by
### •
of its agents and advisers in the terms of their contracts. Barbara Powley, who is a Chartered Accountant. The Board
The appointment of agents and advisers is conducted is satisfied that Mrs Powley has recent and relevant financial
by the Board after due diligence involving consideration experience to guide the Committee in its deliberations. The
of the quality of the parties involved and the Audit and Board is also satisfied that other members of the Audit and
Management Engagement Committee monitors their Management Engagement Committee have relevant and
ongoing performance and contractual arrangements; recent financial experience to fulfil their role effectively and
also have sufficient experience relevant to the closed ended
### • mandates for authorisation of investment transactions
investment company sector and UK listed companies.
and expense payments are set by the Board; and
the Board reviews financial information produced by the The report from this Committee is set out on pages 35 to 37.
### •
Administrator in detail on a regular basis.
page 34 Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025
## Corporate Governance Statement continued
Nomination and Remuneration Committee Number of
This Committee is comprised of all Directors and is chaired by Number of Percentage senior positions
Ethnic background Board members on the Board on the Board
Yuuichiro Nakajima. The Committee meets as required for the
White British or
purpose of considering recruitment to, and removals from, the
other White
Board; levels of remuneration paid to the Directors; and reviews
(including 3 75% 2
the Directors’ Remuneration Report and Remuneration Policy.
minority white
The Committee is a joint Nomination and Remuneration groups)
Committee. It is considered that all Directors offer valuable Asian / Asian
1 25% –
contributions to the Committee and therefore all Directors are British
members of the Committee. Not specified/
– – –
prefer not to say
Further details on performance evaluation, tenure and
independence are provided on page 32. The data in the above tables was collected through self-
reporting by the Directors.
The Committee considers that the performance of each
of the Directors continues to be effective and that they
MODERN SLAVERY ACT 2015
each demonstrate commitment to their role, including
As an investment trust, the Company does not provide goods
commitment of time for Board and Committee meetings and
or services in the normal course of business and does not
any other duties.
have customers. Accordingly, the Directors consider that
Each Committee has adopted formal written terms of the Company is not required to make any slavery or human
reference which are available on the Company’s website www. trafficking statement under the Modern Slavery Act 2015.
montanaro.co.uk/trust/muscit
RISK MANAGEMENT AND INTERNAL CONTROLS
DIVERSITY AND INCLUSION Details of the principal risks and internal controls applied by
The Board’s policy on diversity is to ensure that the Directors the Board are set out on pages 17 to 20 and pages 32 and
on the Board have a broad range of experience, skills and 33respectively.
knowledge, with diversity of thinking, background and
For and on behalf of the Board
perspective. Appointments to the Board are made on merit
against objective criteria, having regard to the benefits of
diversity and the current and future needs of the business and
ARTHUR COPPLE
the other factors set out in the AIC Code.
Chairman
In accordance with UK Listing Rule 6 Annex 1R, the following 16 June 2025
tables, in prescribed format, show the gender and ethnic
background of the Directors at the date of this Report. The
Company meets the gender and ethnic minority requirements
of UK Listing Rule 6.
Number of
Gender identity Number of Percentage senior positions
1
or sex Board members on the Board on the Board
Men 2 50% 1
Women 2 50% 1
Not specified/
– – –
prefer not to say
1
The Company does not disclose the number of Directors in executive
management as this is not applicable for an externally managed
investment company.
Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025 page 35
## Report from the Audit and Management
## Engagement Committee
As Chair of the Audit and Management Engagement MATTERS CONSIDERED IN THE YEAR
Committee (the “Committee”), I am pleased to present its The Committee meets at least three times a year. At the three
Report to shareholders for the year ended 31 March 2025. meetings held during the financial year, the Committee has:
### • reviewed the internal controls and risk management
COMPOSITION OF THE COMMITTEE
systems of the Company and its third party providers;
The Board recognises the requirement for the Committee as a
### • reviewed the performance of the Company’s third party
whole to have competence relevant to the sector in which the
service providers and ensured that they complied with
Company operates and at least one member with recent and
the terms of their agreements and that the terms of their
relevant experience.
agreements remain competitive;
The Committee is chaired by Mrs Powley, a Chartered
### • agreed the audit fee and audit plan with the Auditor,
Accountant, who has recent and relevant financial experience.
including the principal areas of focus;
The Committee operates within clearly defined terms of
### • received and discussed with the Auditor their report on
reference and comprises all the Directors. Given the size of the
the results of the audit;
Board and Mr Copple’s experience, it is felt appropriate for him
### • reviewed the Company’s financial statements and advised
to sit on the Committee. The Directors have a combination of
the Board accordingly;
financial, investment and business experience, specifically with
### • reviewed the FRC’s audit quality review and discussed the
reference to the investment trust sector.
results with the Audit Partner;
ROLE OF THE COMMITTEE reviewed the Manager’s arrangements for its employees
### •
The Committee’s duties include considering and and contractors to raise concerns, in confidence, about
recommending to the Board for approval the contents possible wrongdoing in financial reporting or other
of the half yearly and annual financial statements, and matters insofar as they affect the Company (no incidents
providing an opinion as to whether the Annual Report and were reported during the period);
Financial Statements, taken as a whole, are fair, balanced
### • reviewed the Investment Management Agreement to
and understandable and provide the information necessary
ensure that the terms remain competitive;
for shareholders to assess the Company’s performance,
### • reviewed the performance of the Manager;
business model and strategy. The Committee also reviews
### • satisfied itself that the continued appointment of the
the external Auditors’ report on the Annual Report and
Manager was in the interests of shareholders as a whole;
Financial Statements and is responsible for reviewing and
### forming an opinion on the effectiveness of the external audit • recommended to the Board that the Manager’s
process and audit quality. The Committee is also responsible appointment be continued;
for reviewing the performance of the Investment Manager
### • reviewed the Company’s policy on the supply of non-audit
and other third party service providers, including the terms
services by the Auditor;
of their appointment. Other duties include reviewing the
### • reviewed and, where appropriate, updated the Company’s
appropriateness of the Company’s accounting policies and
risk register; and
ensuring the adequacy of the internal control systems and
### • reviewed its own performance as a Committee and its
standards. The Terms of Reference detailing the scope and
own Terms of Reference.
duties of the Audit and Management Engagement Committee
are available on the Company’s website.
page 36 Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025
## Report from the Audit and Management
## Engagement Committee continued
ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2025 GOING CONCERN AND VIABILITY
Subsequent to discussion with the Manager and the Auditor, The Committee assesses annually whether it is appropriate
the Committee determined the following key areas of risk in to prepare the Company’s financial statements on a going
relation to the financial statements of the Company for the concern basis and makes a recommendation to the Board.
year ended 31 March 2025 and how they were addressed:
The Board concluded that the going concern basis continues
Significant issue How the issue was addressed to be appropriate and further information regarding the going
concern assessment is set out in the Directors’ Report on
Valuation and The Board reviews detailed portfolio
page29.

| ownership of | valuations at each meeting. It relies on the |  |
| --- | --- | --- |
| the Company’s | Administrator and AIFM to use appropriate | The Committee conducts an annual assessment to determine |
| investments | pricing in accordance with the accounting | whether the evaluation of the Company’s long-term viability |
|  | standards adopted by the Company. | remains valid. |
|  | Ownership of listed investments is verified | The Board concluded that the Company continues to remain |
|  | by reconciliation to the Custodian’s | viable and further information regarding the Company’s |
|  | records. In addition, the Depositary | viability is set out in the Directors’ Report on page 29. |

reports to the Committee in relation to its
monitoring and oversight of the activities INTERNAL CONTROL & RISK MANAGEMENT
of the AIFM, Administrator and Custodian. The Committee is responsible for ensuring that suitable
No matters of significance were identified controls are in place to prevent and detect fraud, error and
in their monitoring. misstatement of financial information. As the Company
outsources all of its functions to third parties, it requires
Maintenance of The Committee regularly considers the
these service providers to report on their internal controls.
investment trust controls in place to ensure that the
Further details of the Company’s internal controls and
status regulations for maintaining investment
risk management processes are given in the Corporate
trust status are observed at all times and
Governance report on pages 31 to 34. There were no
receives supporting documentation from
significant matters of concern identified in the Committee’s
the Manager and the Administrator.
review of the internal controls of its third party suppliers.
Incomplete or Income received is accounted for in
inaccurate accordance with the Company’s INTERNAL AUDIT FUNCTION
revenue accounting policies as set out in Note 1 It is considered that the Company does not require an internal
recognition to these accounts. The Board receives audit function, principally because the Company delegates its
income forecasts, including special day-to-day operations to third parties, which are monitored by
dividends, and receives an explanation the Committee and provide control reports on their operations
from the Manager for any significant at least annually.
movements from previous forecasts and
EXTERNAL AUDIT, REVIEW AND APPOINTMENT
prior year figures.
BDO, first appointed at the Company’s AGM held on 31 July
Ensuring the The Committee reviewed and discussed
2020, continues as Auditor. The Audit Committee reviews the
Annual Report the Annual Report and Accounts and
re-appointment of the auditor every year. The Committee
and Accounts is advised the Board that it is fair, balanced
reviewed the effectiveness of the external audit process
fair, balanced and and understandable and provides the
following the completion of the annual audit process for the
understandable information necessary for shareholders
year ended 31 March 2025, taking into consideration their
to assess the Company’s position and
standing, skills, experience, performance and objectivity of the
performance, business model and
firm and the audit team. The Committee has reviewed and
strategy.
accepted reports from BDO on its procedures for ensuring that
its independence and objectivity are safeguarded and that it
has complied with relevant auditing standards. The Committee,
from direct observation and enquiry of the Administrator, is
satisfied that BDO provides effective independent challenge
in carrying out its responsibilities. Following this review, the
Committee concluded that the audit process was effective.
Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025 page 37
BDO’s fee in respect of the audit for the year ended 31March CONCLUSION
2025 is £45,500 (2024: £44,000). Following professional Following consideration of the above and its detailed review
guidelines, the audit partner rotates after five years. The of the half year and annual reports conducted at its meetings,
year ended 31 March 2025 is Peter Smith’s fifth year as the Committee is of the opinion that the Annual Report and
auditpartner. BDO will present potential audit partners to Financial Statements, taken as a whole, are fair, balanced and
the Audit and Management Engagement Committee in 2025, understandable and provide the information necessary to
ahead of the 31 March 2026 year end audit. assess the Company’s position and performance, business
model and strategy. The Committee reported on these findings
POLICY ON NON-AUDIT SERVICES to the Board.
The Committee regards the continued independence of the
The Statement of Directors’ Responsibilities in respect of the
Auditor to be a matter of the highest priority. The Company’s
Annual Report and Financial Statements is on page 41.
policy with regard to the provision of non-audit services by
the external Auditor ensures that no engagement will be By order of the Board
permittedif:
### • the provision of the services would contravene any
regulation or ethical standard; BARBARA POWLEY
Chair, Audit and Management Engagement Committee
### • the Auditor is not considered to be an expert provider of
16 June 2025
the non-audit services;
### • the provision of such services by the Auditor creates a
conflict of interest for either the Board or the Manager;
and
### • the services are considered to be likely to inhibit the
Auditor’s independence or objectivity as Auditor.
As the Company is a Public Interest Entity listed on the London
Stock Exchange, with effect from 1 April 2017, under EU
legislation, a cap on the level of fees incurred for permissible
non-audit services now applies and should not exceed 70% of
the average audit fee for the previous three years.
No non-audit services were provided in the year under review.
page 38 Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025
## Directors’ Remuneration Report
ANNUAL STATEMENT FROM THE CHAIR OF THE NOMINATION REMUNERATION POLICY
AND REMUNERATION COMMITTEE (THE “COMMITTEE”) The Company’s policy is that remuneration should:
I am pleased to present the Directors’ Remuneration Report
### Purpose • be sufficient to attract and retain individuals
for the year ended 31March 2025.
and link to of a high calibre with suitable knowledge
Having reviewed the current level of remuneration payable and experience to promote the long-term
strategy
to Directors, in accordance with the Remuneration Policy, the success of the Company;
Committee has determined that with effect from 1 April 2025,
### • reflect the time spent by the Directors on
Directors’ Fees would be payable as set out in the Future Policy
the Company’s affairs;
Remuneration Table on page 39.

|  | • | reflect the responsibilities borne by the |
| --- | --- | --- |
| In accordance with the Companies Act 2006, the Company is |  | Directors; and |
| required to seek shareholder approval for its remuneration |  | recognise the more onerous roles of the |

### •
policy on a triennial basis. The Remuneration Policy was Chairman of the Board and the Chairman
last approved by shareholders at the 2022 AGM. The Board of the Audit and Management Engagement
has reviewed the Remuneration Policy and believes that it Committee through the payment of
remains appropriate with no changes required. Accordingly, higherfees.
aresolution to approve the policy will be put to shareholders
Directors are remunerated in the form of fees.
at the AGM on 23 July 2025.
The Committee reviews fees on an annual basis
The Committee is chaired by Yuuichiro Nakajima and and makes recommendations to the Board.
comprises all Directors. The Committee meets as required for Reviews will take into account wider factors
such as research carried out on the level of
the purpose of considering levels of remuneration paid to the
fees paid to the Directors of the Company’s
Board and any change in the Directors’ remunerationpolicy.
peers, the size of the Company, any feedback
All Directors are members of the Committee due to their
from shareholders, the level of inflation and
experience and understanding of the Company. Given the size any change in the complexity of the Directors’
of the Board and Mr Copple’s experience and independence responsibilities.
upon appointment as Chairman of the Board, it is considered
Fixed fee Directors are not eligible to be compensated
appropriate that he sit on this Committee.
element for loss of office, nor are they eligible for
bonuses, pension benefits, share options or
other incentives or benefits. There are no
performance-related elements to the Directors’
fees. None of the Directors has a service
contract with the Company and their terms of
appointment are set out in a letter provided
when they join the Board. These letters are
available for inspection at the Company’s
registered office.
Maximum Total remuneration paid to the non-executive
Directors is subject to an annual aggregate limit
of £200,000 in accordance with the Company’s
Articles of Association. Any changes to this limit
will require shareholder approval by Ordinary
Resolution.
Taxable In accordance with the Company’s Articles of
benefits Association, the Directors are also entitled to
be reimbursed for out-of-pocket expenses and
any other reasonable expenses incurred in
the proper performance of their duties. Such
expenses are treated as a benefit in kind and
are subject to tax and national insurance.
Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025 page 39
FUTURE REMUNERATION POLICY TABLE
Directors’ fees for the forthcoming financial year will be as follows:

| Fee for year |  |  |  | Fee for year |  |  |
| --- | --- | --- | --- | --- | --- | --- |
|  | ending |  |  |  | ending |  |
| 31March 2026 |  |  | 31March 2025 |  |  |  |
|  |  | £ |  |  |  | £ |

Chairman 39,150 43,500
Audit and Management Engagement Chair 31,500 35,000
Director 27,000 30,000
DIRECTORS’ EMOLUMENTS FOR THE YEAR (AUDITED)
The Directors who served in the year received the following emoluments in the form of fees:
Total variable
Fees Taxable benefits Total Total fixed remuneration remuneration
£ £ £ £ £
2025 2024 2025 2024 2025 2024 2025 2024 2025 2024
Arthur Copple 43,500 41,500 – – 43,500 41,500 43,500 41,500 – –
Catriona Hoare 30,000 28,500 – – 30,000 28,500 30,000 28,500 – –
1
Yuuichiro Nakajima 30,000 7,125 81 66 30,081 7,191 30,000 7,125 81 66
Barbara Powley 35,000 31,903 1,974 1,656 36,974 33,559 35,000 31,903 1,974 1,656
2
James Robinson – 10,738 – – – 10,738 – 10,738 – –
Total 138,500 119,766 2,055 1,722 140,555 121,488 138,500 119,766 2,055 1,722
1
Appointed to the Board on 1 January 2024.
2
Retired from the Board on 27 July 2023.
No sums are paid to any third parties in respect of Directors services and no sums were paid to any third parties in respect of
advice from remuneration advisers. There have been no payments to past Directors during the financial year ended 31March
2025, whether for loss of office or otherwise.
ANNUAL PERCENTAGE CHANGE IN REMUNERATION OF DIRECTORS
Directors’ pay has increased over the last four years, as set out in the table below:
2025 Change 2024 Change 2023 Change 2022 Change 2021 Change 2020
£ % £ % £ % £ % £ % £
Chairman 43,500 4.8% 41,500 7.8 38,500 4.8 36,750 5.0 35,000 – 35,000
Audit and Management
Engagement
Committee Chair 35,000 4.5% 33,500 8.1 31,000 5.1 29,500 5.4 28,000 – 28,000
Director 30,000 5.3% 28,500 7.5 26,500 5.0 25,250 5.2 24,000 – 24,000
page 40 Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025
## Directors’ Remuneration Report continued
COMPANY’S PERFORMANCE RELATIVE IMPORTANCE OF DIRECTORS’ FEES
In accordance with the Companies Act 2006, a graph showing The table below sets out, in respect of the financial year ended
the Company’s share price total return compared to its 31March 2025 and the preceding financial year:
benchmark is set out below. The share price includes all
a) the remuneration paid to the Directors;
dividends reinvested.
b) the distributions made to shareholders by way of dividends;
Share Price and Benchmark* Performance and
(rebased to 100 on 31March 2015)
c) the cost of Ordinary shares bought back.
180

|  |  |  | Year ended |  |  | Year ended |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 160 |  | 31March 2025 |  |  | 31March 2024 |  |  | Change |  |
|  |  |  |  | £ |  |  | £ |  | % |
| 140 | Total remuneration 140,555 121,488 15.7 |  |  |  |  |  |  |  |  |

Dividends paid 9,088,000 7,632,000 19.0
120
Investment
100 management fee 1,108,000 1,104,000 0.4
Share Price Total Return
Benchmark Total Return Cost of Ordinary
0
shares bought back 25,270,000 – –
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
* The Company’s Benchmark is the Deutsche Numis Smaller Companies Index
DIRECTORS’ INTERESTS (AUDITED)
(excluding investment companies).
There is no requirement under the Articles of Association for
Directors to hold shares in the Company. The interests of the
VOTING AT AGM
current Directors and their families in the voting rights of the
The Directors’ Remuneration Report for the year ended
Company are set out below:
31March 2024 was approved by shareholders at the AGM
held on 25July 2024. The Directors’ Remuneration Policy

|  |  |  | As at |  |  | As at |
| --- | --- | --- | --- | --- | --- | --- |
| was last approved by shareholders at the Company’s Annual | 31March 2025 |  |  | 31March 2024 |  |  |
|  |  | Number of |  |  | Number of |  |

General Meeting, held on 27 July 2022. The proxy voting was
shares shares
asfollows:
Arthur Copple 300,000 275,000
Remuneration Report Remuneration Policy
Catriona Hoare 18,080 9,039

|  | Number of | Number of |  |
| --- | --- | --- | --- |
|  | votes cast % | votes cast % | Yuuichiro Nakajima 10,000 – |
| For* 72,136,412 99.70 83,266,732 99.89 |  |  | Barbara Powley 24,209 13,026 |

Against 215,737 0.30 90,399 0.11
On 14 April 2025, Barbara Powley acquired 13,500 shares and
Total votes cast 72,352,149 83,357,131
now holds 37,709 shares in total. There have been no other
Number of
changes to the above holdings between 31March 2025 and
voteswithheld 38,153 0.05 22,405 0.03
the date of this Annual Report. None of the Directors nor any
* including votes granting discretion to the Chairman who voted in favour.
persons connected with them had a material interest in any
of the Company’s transactions, arrangements or agreements
Any views expressed by shareholders on the fees being paid to
during the year.
Directors will be taken into consideration by the Board when
reviewing the Directors’ Remuneration Policy and in the annual
STATEMENT OF IMPLEMENTATION OF REMUNERATION POLICY
review of Directors’ fees.
IN RESPECT OF THE FINANCIAL YEAR ENDING 31MARCH 2026
The Committee will, as usual, review Directors’ fees during
2025/26 and consider whether any further changes to
remuneration are required.
On behalf of the Board
YUUICHIRO NAKAJIMA
Chair, Nomination and Remuneration Committee
16 June 2025
Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025 page 41
## Statement of Directors’ Responsibilities
### in respect of the Annual Report and Accounts
The Directors are responsible for preparing the Annual The Directors are responsible for ensuring the Annual Report
Report and Accounts in accordance with applicable law and and Accounts are made available on a website. Financial
regulations. statements are published on the Company’s website in
accordance with legislation in the United Kingdom governing
Company law requires the Directors to prepare financial
the preparation and dissemination of financial statements,
statements for each financial year. Under that law, they have
which may vary from legislation in other jurisdictions. The
elected to prepare the financial statements in accordance with
maintenance and integrity of the Company’s website is the
UK Accounting Standards and applicable law (UK Generally
responsibility of the Directors. The Directors’ responsibility also
Accepted Accounting Practice) including FRS 102 “The Financial
extends to the ongoing integrity of the financial statements
Reporting Standard applicable in the UK and Republic
contained therein.
ofIreland”.
Each of the Directors who are listed on pages 25 and 26
Under company law, the Directors must not approve the
confirm to the best of their knowledge that:
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 financial statements, prepared in accordance with
the profit or loss of the Company for that period. In preparing UK Accounting Standards, give a true and fair view of
these financial statements, the Directors are required to: the assets, liabilities, financial position and return of the
Company; and
### • select suitable accounting policies and then apply them
### • the Strategic Report and the Directors’ Report include a
consistently;
fair review of the development and performance of the
### • make judgements and estimates that are reasonable and
business and the position of the Company, together with
prudent;
a description of the principal risks and uncertainties that
### • state whether applicable UK Accounting Standards
it faces.
have been followed, subject to any material departures
In the opinion of the Board, the Annual Report and Accounts,
disclosed and explained in the financial statements;
taken as a whole, are fair, balanced and understandable and
### • prepare the financial statements on the going concern
provide the information necessary for shareholders to assess
basis unless it is inappropriate to presume that the
the Company’s position and performance, business model and
Company will continue in business; and
strategy.
### • prepare a Directors’ report, a strategic report and
By order of the Board
Directors’ remuneration report which comply with the
requirements of the Companies Act 2006.
The Directors are responsible for keeping adequate
ARTHUR COPPLE
accounting records that are sufficient to show and explain
Chairman
the Company’s transactions and disclose with reasonable
16 June 2025
accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply
with the Companies Act 2006. They are also responsible for
safeguarding the assets of the Company and hence for taking
reasonable steps for the prevention and detection of fraud
and other irregularities. The Directors are responsible for
ensuring that the Annual Report and Accounts, taken as a
whole, are fair, balanced, and understandable and provides
the information necessary for shareholders to assess the
Company’s performance, business model and strategy.
page 42 Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025
## Independent Auditor’s Report
### to the Members of Montanaro UK Smaller Companies Investment Trust PLC
OPINION ON THE FINANCIAL STATEMENTS
In our opinion the financial statements:
• give a true and fair view of the state of the Company’s affairs as at 31 March 2025 and of its loss for the year then ended;
### • have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
### • have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Montanaro UK Smaller Companies Investment Trust plc (the ‘Company’) for the
year ended 31 March 2025 which comprise the Income Statement, the Statement of Changes in Equity, the Balance Sheet and
notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that
has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting
Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted
Accounting Practice).
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Ourresponsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide
abasis for our opinion. Our audit opinion is consistent with the additional report to the audit committee.
Independence
Following the recommendation of the Audit and Management Engagement Committee, we were appointed by The Board of
Directors on 17 March 2020 and subsequently by the members at the AGM on 31 July 2020 to audit the financial statements
for the year ended 31 March 2021 and subsequent financial periods. The period of total uninterrupted engagement including
retenders and reappointments is five years, covering the years ended 31 March 2021 to 31 March 2025. We remain independent
of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the
UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. The non-audit services prohibited by that standard were not provided to
the Company.
CONCLUSIONS RELATING TO GOING CONCERN
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment of the Company’s ability to
continue to adopt the going concern basis of accounting included:
• Evaluating the appropriateness of the Directors’ method of assessing the going concern in light of economic and market
conditions by reviewing the information used by the Directors in completing their assessment;
### • Assessing the appropriateness of the Directors’ assumptions and judgements made in their base case and stress tested
forecasts including consideration of the available cash resources relative to forecast expenditure;
• Challenging the Directors’ assumptions and judgements made in their forecasts by performing an independent analysis of
the liquidity of the portfolio; and
• Reviewing the loan agreements to identify the covenants and assessing the likelihood of them being breached based on the
Directors’ forecasts and our sensitivity analyses.
Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025 page 43
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Company’s ability to continue as a going concern for a period of at
least twelve months from when the financial statements are authorised for issue.
In relation to the Company’s reporting on how it has applied the UK Corporate Governance Code, we have nothing material
to add or draw attention to in relation to the Directors’ statement in the financial statements about whether the Directors
considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections
of this report.
OVERVIEW
Key audit matters 2025 2024
### • Valuation and ownership of quoted investments 3 3
Company financial statements as a whole
Materiality
### • £1,500,000 (2024:£1,990,000) based on 1% (2024: 1%) of Net assets
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
Our audit was scoped by obtaining an understanding of the Company and its environment, including the Company’s system
of internal control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of
management override of internal controls, including assessing whether there was evidence of bias by the Directors that may have
represented a risk of material misstatement.
page 44 Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025
## Independent Auditor’s Report continued
### to the Members of Montanaro UK Smaller Companies Investment Trust PLC
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to
fraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources
in the audit, and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
How the scope of our audit addressed the

| Key audit matter |  | key audit matter |
| --- | --- | --- |
| Valuation and ownership of | The investment portfolio at the year-end comprised of | We responded to this matter |
| quoted investments | quoted equity investments held at fair value through | by testing the valuation and |
| Notes 1 and 9 | profit or loss. | ownership of the whole portfolio |

of quoted investments. We
There is a risk that the prices used for the listed
performed the following
investments held by the Company are not reflective of
procedures:
fair value and the risk that errors made in the recording
### of investment holdings result in the incorrect reflection • Confirmed the year-end
of investments owned by the Company. bid or SETS price was used
by agreeing to externally
Therefore, we considered the valuation and ownership
quotedprices;
of quoted investments to be the most significant
### • Assessed if there were
audit area as the investments also represent the most
contra indicators, such as
significant balance in the financial statements and
liquidity considerations, to
underpin the principal activity of the entity.
suggest bid price is not the
For these reasons and the materiality of the balance
most appropriate indication
in relation to the financial statements as a whole,
of fair value by considering
weconsidered this to be a key audit matter.
the realisation period for
individual holdings;
### • Recalculated the valuation
by multiplying the number
of shares held per the
statement obtained from the
custodian by the valuation
per share; and
### • Obtained direct confirmation
of the number of shares
held per equity investment
from the custodian regarding
all investments held at the
balance sheet date.
Key observations:
Based on our procedures
performed we did not identify
any matters to suggest the
valuation or ownership of the
quoted equity investments was
not appropriate.
Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025 page 45
OUR APPLICATION OF MATERIALITY
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We
consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of
reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower
materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these
levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the
particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance
materiality as follows:

| Company financial statements |  | Company financial statements |  |
| --- | --- | --- | --- |
|  | 2025 |  | 2024 |
|  | £ |  | £ |

Materiality 1,500,000 1,990,000
Basis for determining materiality 1 % of Net assets 1 % of Net assets
Rationale for the benchmark applied As an investment trust, the net As an investment trust, the net
asset value is the key measure of asset value is the key measure of
performance for users of the financial performance for users of the financial
statements. statements.
Performance materiality 1,130,000 1,493,000
Basis for determining 75% of materiality 75% of materiality
performance materiality
Rationale for the percentage applied The level of performance materiality The level of performance materiality
forperformance materiality applied was set after having considered applied was set after having considered
a number of factors including the a number of factors including the
expected total value of known and expected total value of known and
likely misstatements and the level of likely misstatements and the level of
transactions in the year. transactions in the year.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £75,000
(2024:£99,500). We also agreed to report differences below this threshold that, in our view, warranted reporting on
qualitativegrounds.
OTHER INFORMATION
The directors are responsible for the other information. The other information comprises the information included in the
Annual Report & Financial Statements other than the financial statements and our auditor’s report thereon. Our opinion on the
financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report,
wedo not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained
in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or
apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this regard.
page 46 Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025
## Independent Auditor’s Report continued
### to the Members of Montanaro UK Smaller Companies Investment Trust PLC
CORPORATE GOVERNANCE STATEMENT
The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and that part of
the Corporate Governance Statement relating to the Company’s compliance with the provisions of the UK Corporate Governance
Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial statements or our knowledge obtained during the audit.
### Going concern and longer-term viability • The Directors’ statement with regards to the appropriateness of adopting
the going concern basis of accounting and any material uncertainties
identified; and
### • The Directors’ explanation as to their assessment of the Company’s
prospects, the period this assessment covers and why the period
isappropriate.
### Other Code provisions • Directors’ statement on fair, balanced and understandable;
### • Board’s confirmation that it has carried out a robust assessment of the
emerging and principal risks;
### • The section of the Annual Report that describes the review of effectiveness
of risk management and internal control systems; and
### • The section describing the work of the Audit Committee.
OTHER COMPANIES ACT 2006 REPORTING
Based on the responsibilities described below and our work performed during the course of the audit, we are required by the
Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.
Strategic report and Directors’ report In our opinion, based on the work undertaken in the course of the audit:
### • the information given in the Strategic report and the Directors’ report
for the financial year for which the financial statements are prepared is
consistent with the financial statements; and
### • the Strategic report and the Directors’ report have been prepared in
accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Company and its
environment obtained in the course of the audit, we have not identified
material misstatements in the Strategic report or the Directors’ report.
Directors’ remuneration In our opinion, the part of the Directors’ remuneration report to be audited
has been properly prepared in accordance with the Companies Act 2006.
Matters on which we are required to We have nothing to report in respect of the following matters in relation to
report by exception which the Companies Act 2006 requires us to report to you if, in our opinion:
### • adequate accounting records have not been kept, or returns adequate for
our audit have not been received from branches not visited by us; or
### • the financial statements and the part of the Directors’ remuneration report
to be audited are not in agreement with the accounting records and
returns; or
### • certain disclosures of Directors’ remuneration specified by law are not
made; or
### • we have not received all the information and explanations we require for
our audit.
Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025 page 47
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the Directors’ responsibilities statement, the Directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors
determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due
to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financialstatements.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including fraud is detailed below:
Non-compliance with laws and regulations
Based on:
### • Our understanding of the Company and the industry in which it operates;
### • Discussion with the Investment Manager and Administrator and those charged with governance; and
### • Obtaining and understanding of the Company’s policies and procedures regarding compliance with laws and regulations;
and we considered the significant laws and regulations to be Companies Act 2006, the FCA listing and DTR rules, the
principles of the AIC Code of Corporate Governance, industry practice represented by the AIC SORP, the applicable
accounting framework, and qualification as an Investment Trust under UK tax legislation as any non-compliance of this
would lead to the Company losing various deductions and exemptions from corporation tax.
Our procedures in respect of the above included:
### • Agreement of the financial statement disclosures to underlying supporting documentation;
• Enquiries of management and those charged with governance relating to the existence of any non-compliance with laws and
regulations;
### • Reviewing minutes of meeting of those charged with governance throughout the period for instances of non-compliance
with laws and regulations; and
### • Reviewing the calculation in relation to Investment Trust compliance to check that the Company was meeting its
requirements to retain their Investment Trust Status. This included a review of other qualititatve factors and ensuring
compliance with these.
page 48 Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025
## Independent Auditor’s Report continued
### to the Members of Montanaro UK Smaller Companies Investment Trust PLC
Fraud
We assessed the susceptibility of the financial statement to material misstatement including fraud.
Our risk assessment procedures included:
### • Enquiry with the Investment Manager, the Administrator and those charged with governance regarding any known or
suspected instances of fraud;
### • Review of minutes of meetings of those charged with governance for any known or suspected instances of fraud; and
### • Discussion amongst the engagement team as to how and where fraud might occur in the financial statements.
Based on our risk assessment, we considered the areas most susceptible to fraud to be management override of controls.
Our procedures in respect of the above included:
### • In addressing the risk of management override of control, we:
### • Performed a review of estimates and judgements applied by management in the financial statements to assess their
appropriateness and the existence of any systematic bias;
### • Considered the opportunity and incentive to manipulate accounting entries and target tested relevant adjustments
made in the period end financial reporting process;
### • Reviewed for significant transactions outside the normal course of business; and
### • Performed a review of unadjusted audit differences, if any, for indications of bias or deliberate misstatement.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members,
who were deemed to have the appropriate competence and capabilities, and remained alert to any indications of fraud or non-
compliance with laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that
the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error,
asfraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are
inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is
from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
USE OF OUR REPORT
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to
state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or
for the opinions we have formed.
Peter Smith
For and on behalf of BDO LLP, Statutory Auditor
London, UK
16 June 2025
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025

page 49

## Income Statement for the year to 31 March 2025

|   | Notes | Year to 31 March 2025 |   |   | Year to 31 March 2024  |   |   |
| --- | --- | --- | --- | --- | --- | --- | --- |
|   |   |  Revenue £'000 | Capital £'000 | Total £'000 | Revenue £'000 | Capital £'000 | Total £'000  |
|  (Losses)/gains on investments designated at fair value through profit or loss | 9 | – | (18,007) | (18,007) | – | 11,137 | 11,137  |
|  Investment income | 2 | 6,560 | – | 6,560 | 6,347 | – | 6,347  |
|  Investment management fee | 3 | (277) | (831) | (1,108) | (276) | (828) | (1,104)  |
|  Other expenses | 4 | (695) | – | (695) | (618) | – | (618)  |
|  **Net return before finance costs and taxation** |  | **5,588** | **(18,838)** | **(13,250)** | **5,453** | **10,309** | **15,762**  |
|  Interest payable and similar charges | 5 | (169) | (508) | (677) | (175) | (522) | (697)  |
|  **Net return before taxation** |  | **5,419** | **(19,346)** | **(13,927)** | **5,278** | **9,787** | **15,065**  |
|  Taxation | 6 | – | – | – | – | – | –  |
|  **Net return after taxation** |  | **5,419** | **(19,346)** | **(13,927)** | **5,278** | **9,787** | **15,065**  |
|  **Return per Ordinary share** | 8 | **3.28p** | **(11.70p)** | **(8.42p)** | **3.15p** | **5.85p** | **9.00p**  |

The total column of this statement is the Statement of Total Comprehensive Income of the Company prepared in accordance with FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland". The supplementary revenue return and capital return columns are prepared in accordance with the Statement of Recommended Practice issued by the Association of Investment Companies ("AIC SORP").

All revenue and capital items in the above statement derive from continuing operations.

There are no items of other comprehensive income and therefore the net loss after taxation is both the profit/loss and the total comprehensive income for the year.

No operations were acquired or discontinued in the year.

The notes on pages 52 to 62 form part of these financial statements.
page 50 Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025
## Statement of Changes in Equity
### for the year to 31 March 2025

|  | Called-up |  |  | Share |  | Capital |  |  | Distributable |  |  | Total equity |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  | share | premium |  | redemption |  | Special | Capital |  | revenue |  | shareholders’ |  |
|  |  | capital | account |  |  | reserve | reserve* | reserve* |  | reserve* |  |  | funds |
| Year to 31March 2025 Notes |  | £’000 |  | £’000 |  | £’000 | £’000 | £’000 |  |  | £’000 |  | £’000 |

As at 31 March 2024 3,348 19,307 1,362 4,642 170,230 193 199,082
Total comprehensive income:
Fair value movement of
investments 9 – – – – (18,007) – (18,007)
Costs allocated to capital – – – – (1,339) – (1,339)
Net revenue for the year – – – – – 5,419 5,419
– – – – (19,346) 5,419 (13,927)
Share Buybacks 13 – – – (4,642) (20,628) – (25,270)
Dividends paid in the year 7 – – – – (4,033) (5,055) (9,088)
As at 31 March 2025 3,348 19,307 1,362 – 126,223 557 150,797

|  | Called-up |  |  | Share |  | Capital |  |  | Distributable |  | Total equity |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  | share | premium |  | redemption |  | Special | Capital |  | revenue | shareholders’ |  |
|  |  | capital | account |  |  | reserve | reserve* | reserve* |  | reserve* |  | funds |
| Year to 31March 2024 Notes |  | £’000 |  | £’000 |  | £’000 | £’000 | £’000 |  | £’000 |  | £’000 |

As at 31 March 2023 3,348 19,307 1,362 4,642 162,418 572 191,649
Total comprehensive income:
Fair value movement of
investments 9 – – – – 11,137 – 11,137
Costs allocated to capital – – – – (1,350) – (1,350)
Net revenue for the year – – – – – 5,278 5,278
– – – – 9,787 5,278 15,065
Dividends paid in the year 7 – – – – (1,975) (5,657) (7,632)
As at 31 March 2024 3,348 19,307 1,362 4,642 170,230 193 199,082
* These reserves, excluding any unrealised capital reserve are distributable. As at 31March 2025 distributable reserves totalled £136,665,000 (2024: £157,133,000).
The notes on pages 52 to 62 form part of these financial statements.
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025

page 51

## Balance Sheet

|   | Notes | 31 March 2025 |   | 31 March 2024  |   |
| --- | --- | --- | --- | --- | --- |
|   |  | £'000 | £'000 | £'000 | £'000  |
|  **Fixed assets** |  |  |  |  |   |
|  Investments at fair value | 9 |  | **157,502** |  | 204,694  |
|  **Currents assets** |  |  |  |  |   |
|  Debtors | 10 | **2,453** |  | 312 |   |
|  Cash at bank |  | **4,684** |  | 14,627 |   |
|   |  | **7,137** |  | 14,939 |   |
|  **Creditors: amounts falling due within one year** |  |  |  |  |   |
|  Other creditors | 11 | **(1,342)** |  | (551) |   |
|  Borrowings | 12 | **(12,500)** |  | (20,000) |   |
|   |  | **(13,842)** |  | (20,551) |   |
|  **Net current liabilities** |  |  | **(6,705)** |  | (5,612)  |
|  **Net assets** |  |  | **150,797** |  | 199,082  |
|  **Share capital and reserves** |  |  |  |  |   |
|  Called-up share capital | 13 |  | **3,348** |  | 3,348  |
|  Share premium account |  |  | **19,307** |  | 19,307  |
|  Capital redemption reserve |  |  | **1,362** |  | 1,362  |
|  Special reserve |  |  | **-** |  | 4,642  |
|  Capital reserve |  |  | **126,223** |  | 170,230  |
|  Distributable revenue reserve |  |  | **557** |  | 193  |
|  **Total equity shareholders' funds** |  |  | **150,797** |  | 199,082  |
|  **Net asset value per Ordinary share: Basic and Diluted** | 14 |  | **105.86p** |  | 118.94p  |

These financial statements were approved and authorised for issue by the Board of Directors on 16 June 2025.

### ARTHUR COPPLE

Chairman

Company Registered Number: 3004101

The notes on pages 52 to 62 form part of these financial statements.
page 52

Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025

# Notes to the Financial Statements

## 1 Accounting Policies

Montanaro UK Smaller Companies Investment Trust PLC ("MUSCIT") is a company incorporated and registered in England and Wales. The principal activity of the Company is that of an investment trust company within the meaning of Sections 1158/1159 of the Corporation Tax Act 2010. The registered office of the Company is 53 Threadneedle Street, London EC2R 8AR.

### BASIS OF PREPARATION

The financial statements have been prepared under FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' and in accordance with UK applicable accounting standards and the Statement of Recommended Practice issued by the Association of Investment Companies ("AIC SORP"). The Company meets the requirements of FRS 102 section 7.1.A and therefore has elected not to present the Statement of Cash Flows for the year ended 31 March 2025. The principal accounting policies adopted in the preparation of these financial statements are set out below.

The financial statements have been presented in sterling, which is the Company's functional currency as the UK is the primary environment in which it operates, rounded to the nearest £'000, except where otherwise indicated.

### GOING CONCERN

The financial statements have been prepared on a going concern basis and on the basis that approval as an investment trust company will continue to be met.

The Directors have made an assessment of the Company's ability to continue as a going concern and are satisfied that the Company has adequate resources to continue in business for the foreseeable future, being until at least 16 June 2026. Please refer to page 29 for full details of the Directors' going concern assessment.

The Company's Articles of Association ("Articles") contain a requirement for shareholders to vote on the continuation of the Company at regular intervals. At the Company's AGM held on 12 August 2021, shareholders voted to remove the obligation to convene a General Meeting during 2023 for the purpose of voluntarily winding up the Company. The next Continuation Vote is scheduled to be held in 2027.

The Directors are not aware of any material uncertainties that may cast significant doubt on the Company's ability to continue as a going concern, having taken into account the liquidity of the Company's investment portfolio and the Company's financial position in respect of its cash flows, borrowing facilities and investment commitments (of which there are none of significance). Therefore, the financial statements have been prepared on the going concern basis.

### SEGMENTAL REPORTING

The Directors are of the opinion that the Company is engaged in a single segment of business, being investment business. The Company primarily invests in listed companies.

### INCOME RECOGNITION

Dividends receivable on quoted equity shares are taken to revenue on an ex-dividend basis. Dividends receivable on equity shares where no ex-dividend date is quoted are recognised when the Company's right to receive payment is established. Fixed returns on non-equity shares are recognised on a time-apportioned basis.

Dividends from overseas companies are shown gross of any non-recoverable withholding taxes, which are presented separately in the Income Statement.

Special dividends are taken to revenue or capital account depending on their nature. In deciding whether a dividend should be regarded as a capital or revenue receipt, the Board reviews all relevant information as to the reasons for the sources of the dividend on a case-by-case basis against the AIC SORP guidance.

When the Company has elected to receive scrip dividends in the form of additional shares rather than in cash, the amount of the cash dividend forgone is recognised as income. Any excess in the value of the cash dividend is recognised in the capital column.
Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025 page 53
1 Accounting Policies continued
EXPENSES AND FINANCE COSTS
All expenses and finance costs are accounted for on an accruals basis. On the basis of the Board’s expected long-term split of
total returns, the Company charges 75% of its management fee and finance costs to capital.
Expenses directly incurred in relation to arranging debt and loan facilities have been amortised over the term of the finance.
INVESTMENTS
The Company’s business is investing in financial assets with a view to profiting from their total return in the form of income and
capital growth. This portfolio of financial assets is managed and its performance evaluated on a fair value basis, in accordance
with a documented investment strategy. Information about the portfolio is provided internally on that basis to the Company’s
Board of Directors.
In accordance with FRS 102 sections 11 and 12, all investments held by the Company are classified upon initial recognition as
financial assets at fair value through profit or loss and are measured at subsequent reporting dates at fair value, which is the bid
price or the closing price for the Stock Exchange Electronic Trading Service – quotes and crosses (‘SETSqx’). All transaction costs in
relation to the purchase of an investment are included in the initial book cost. The Company derecognises a financial asset either
when the contractual rights to the cash flows from the asset expire or when it transfers the financial asset and substantially all
the risks and rewards of ownership of the asset to another entity. On derecognition of a financial asset, the difference between
the asset’s carrying amount and the sum of consideration received and receivable after transaction costs have been deducted,
and the cumulative gain or loss that had been accumulated is recognised in profit or loss.
All investments for which fair value is measured in the financial statements are categorised within the fair value hierarchy in Note 9.
OTHER RECEIVABLES AND PAYABLES
Trade receivables and trade payables are measures at amortised cost.
TAXATION
UK corporation tax payable is provided on taxable profits at the current rate.
Provision is made for deferred taxation, without discounting, on all timing differences and is calculated using substantively
enacted tax rates.
This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable
profits from which the future reversal of the underlying timing differences can be deducted.
DIVIDENDS PAYABLE TO SHAREHOLDERS
Interim dividends are recognised in the period in which they have been paid.
BANK LOANS AND BORROWINGS
All bank loans and borrowings are carried at amortised cost. Costs in relation to arranging debt finance have been amortised
over the term of the instrument.
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the Company’s financial statements requires the Directors to make judgements, estimates and assumptions
that affect the reported amounts recognised in the financial statements and disclosure of contingent liabilities. However,
uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to
the carrying amount of the asset or liability affected in future periods. The area requiring the most significant judgement is
recognition and classification of unusual or special dividends received as either revenue or capital in nature. The estimates
and underlying assumptions are reviewed on an ongoing basis. There have been no other significant judgements, estimates or
assumptions which have had a significant impact on the financial statements for the current or preceding financial year.
page 54 Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025
## Notes to the Financial Statements continued
### at 31 March 2025
1 Accounting Policies continued
RESERVES
Share premium
The share premium account represents the accumulated premium paid for shares issued in previous periods above their
nominal value less expenses of issuance. This is a reserve forming part of the non-distributable reserves. The following items are
taken to this reserve; costs associated with the issue of equity, the surplus on sale of Ordinary shares from Treasury premium on
the issue of shares.
Capital redemption reserve
The capital redemption reserve represents non-distributable reserves that arise from the purchase and cancellation of shares.
Special reserve
The special reserve was created by the cancellation of the share premium account by order of the High Court in August 1998.
The costs of buying back Ordinary shares, including related stamp duty and transaction costs, are charged to the special reserve.
This reserve can be distributed.
Revenue reserve
The revenue reserve represents the surplus of accumulated profits from the income derived from holding investment assets less
the costs and interest on cash balances associated with running the Company. This reserve can be distributed.
Capital reserve
The following are accounted for in this reserve:
### • gains and losses on the realisation of investments;
### • net movement arising from changes in the fair value of investments;
### • net movement from changes in the fair value of derivative financial instruments;
### • expenses, together with related taxation effect, charged to this account in accordance with the above policies;
### • cost of purchasing Ordinary shares to be held in Treasury or cancellation;
• proceeds from the issue of Ordinary shares held in Treasury equivalent to the weighted average cost of the repurchase; and
### • dividends paid from the realised Capital Reserve.
The Company’s Articles of Association permit it to distribute from the Capital Reserve any surplus arising from the realisation of its
investments.
2 Income

|  | Year to |  | Year to |
| --- | --- | --- | --- |
| 31March 2025 |  | 31March 2024 |  |
|  | £’000 |  | £’000 |

UK dividend income 6,050 5,880
Overseas dividend income 20 36
Income from investments 6,070 5,916
Bank interest 490 431
Total income 6,560 6,347
Total income comprises
Dividends from financial assets designated at fair value through profit or loss 6,070 5,916
Interest received 490 431
Dividends 6,560 6,347
Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025 page 55
3 Investment Management Fee
Year to 31March 2025 Year to 31March 2024
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Investment management fee 264 794 1,058 263 791 1,054
AIFMD fee 13 37 50 13 37 50
277 831 1,108 276 828 1,104
Up to 30 September 2024, the Manager received a monthly management fee equivalent to 1/12 of 0.50% of the gross assets of
the Company valued at the close of business on the last business day of each month.
With effect from 31 December 2024, the Manager received a monthly management fee equivalent to 1/12 of 0.50% of the net
assets of the Company valued at the close of business on the last business day of each month.
At 31 March 2025, £234,000 (2024: £275,000) was due for payment to the Manager.
The AIFM receives an annual fee of £50,000 (2024: £50,000).
4 Other Expenses

|  | Year to |  | Year to |
| --- | --- | --- | --- |
| 31March 2025 |  | 31March 2024 |  |
|  | £’000 |  | £’000 |

Company secretarial fees 167 158
1
Directors' fees 139 120
Depositary fee 56 42
Registrar fee 47 45
Auditor's remuneration for:
– audit 46 44
Custody and other bank charges 21 21
Legal fees 6 14
Other expenses (including VAT) 213 174
695 618
†
A breakdown of the Directors’ remuneration is set out in the Directors’ Remuneration Report on page 39.
The Company has no employees.
5 Interest Payable and Similar Charges
Year to 31March 2025 Year to 31March 2024
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Interest payable on loan 163 490 653 167 498 665
Loan commitment fee 6 18 24 8 24 32
169 508 677 175 522 697
page 56 Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025
## Notes to the Financial Statements continued
### at 31 March 2025
6 Taxation
Year to 31March 2025 Year to 31March 2024
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Current tax:
Withholding tax suffered – – – – – –
– – – – – –
The taxation charge for the year is different from the standard rate of Corporation Tax in the UK of 25% (2024: 25%). The
differences are explained below.
Year to 31March 2025 Year to 31March 2024
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Net return before taxation 5,419 (19,346) (13,927) 5,278 9,787 15,065
Theoretical tax at UK corporation tax rate of 25%
(2024: 25%) 1,355 (4,836) (3,481) 1,319 2,447 3,766
Effect of:
– UK dividends that are not taxable (1,513) – (1,513) (1,314) – (1,314)
– Foreign dividends that are not taxable (5) – (5) (9) – (9)
– Non-taxable investment losses/(gains) – 4,502 4,502 – (2,784) (2,784)
– Unrelieved excess expenses 163 334 497 4 337 341
Current tax charge for the year – – – – – –
Factors that may affect future tax charges
Deferred tax is not provided on capital gains and losses arising on the revaluation or disposal of investments because the
Company meets (and intends to continue for the foreseeable future to meet) the conditions for approval as an investment trust
company. At 31March 2025, based on current estimates and including the accumulation of net allowable losses, the Company
had unrelieved losses of £58,334,000 (2024: £56,346,000) that are available to offset future taxable revenue. The potential
deferred tax asset has been calculated using a corporation tax rate of 25% (2024: 25%). A deferred tax asset of £14,583,000
(2024: £14,086,000) has not been recognised because the Company is not expected to generate sufficient taxable income in
future periods in excess of the available deductible expenses. Accordingly, the Company is unlikely to be able to reduce future tax
liabilities through the use of existing surplus losses.
7 Dividends

|  | Year to |  | Year to |
| --- | --- | --- | --- |
| 31March 2025 |  | 31March 2024 |  |
|  | £’000 |  | £’000 |

In respect of the previous period:
Paid
2024 fourth quarter dividend of 1.19p (2024: 1.15p) 1,991 1,925
In respect of the year under review:
Paid
2025 first quarter dividend of 1.24p (2024: 1.13p) 2,076 1,891
2025 second quarter dividend of 1.22p (2024: 1.10p) 2,042 1,841
2025 third quarter dividend of 1.78p (2024: 1.18p) 2,979 1,975
Dividends distributed during the year 9,088 7,632
Declared:
2025 fourth quarter dividend of 1.59p (2024: 1.19p)* 2,265 1,991
* The fourth quarter dividend was declared on 8 April 2025. The ex-dividend date was 17 April 2025 and it was paid on 14 May 2025.
The quarters referred to in the table above relate to the Company’s financial year.
Any dividends paid in excess of the Revenue Reserve are paid from the realised Capital Reserve.
Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025 page 57
8 Return per Ordinary Share
Year to 31March 2025 Year to 31March 2024
Revenue Capital Total Revenue Capital Total
Ordinary share 3.28p (11.70)p (8.42)p 3.15p 5.85p 9.00p
Revenue return per Ordinary share is based on the net return after taxation of £5,419,000 (2024: £5,278,000) and 165,391,764
(2024: 167,379,790) Ordinary shares, being the weighted average number of Ordinary shares in issue, excluding any shares held
in Treasury.
Capital return per Ordinary share is based on net capital loss after taxation of £19,346,000 (2024: net capital gain after taxation of
£9,787,000), and on 165,391,764 (2024: 167,379,790) Ordinary shares, being the weighted average number of Ordinary shares in
issue, excluding any shares held in Treasury.
9 Investments

|  | As at |  | As at |
| --- | --- | --- | --- |
| 31March 2025 |  | 31March 2024 |  |
|  | £’000 |  | £’000 |

Total investments at fair value 157,502 204,694
The investment portfolio comprises 40 (2024: 35) traded and listed UK equity holdings.

|  | Year to |  | Year to |
| --- | --- | --- | --- |
| 31March 2025 |  | 31March 2024 |  |
|  | £’000 |  | £’000 |

Opening book cost 191,404 188,991
Opening unrealised appreciation 13,290 11,786
Opening fair value 204,694 200,777
Movements in the year
Purchases at cost 75,784 40,675
Sales – proceeds (104,969) (47,895)
– realised gains on sales against book cost 5,167 9,633
(Decrease)/increase in investment holding gains (23,174) 1,504
Total movement in the year (47,192) 3,917
Closing book cost 167,386 191,404
Closing unrealised (depreciation)/appreciation (9,884) 13,290
Closing fair value 157,502 204,694
FAIR VALUE HIERARCHY
Financial assets of the Company are carried in the Balance Sheet at their fair value or approximation of fair value. The fair value
is the amount at which the asset could be sold in an ordinary transaction between market participants, at the measurement
date, other than a forced or liquidation sale. The Company measures fair values using the following hierarchy that reflects the
significance of the inputs used in making the measurements.
Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value
measurement of the relevant asset as follows:
### • Level 1 – Valued using quoted prices, unadjusted in active markets for identical assets and liabilities.
• Level 2 – Valued by reference to valuation techniques using observable inputs for the asset or liability other than quoted
prices included in level 1.
• Level 3 – Valued by reference to valuation techniques using inputs that are not based on observable market data for the
asset or liability. Assessing the significance of a particular input requires judgement, considering factors specific to the asset
or liability.
page 58 Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025
## Notes to the Financial Statements continued
### at 31 March 2025
9 Investments continued
The table below sets out the fair value measurement of financial assets and liabilities in accordance with the fair value hierarchy.
31March 2025 31March 2024
Level 1 Total Level 1 Total
£’000 £’000 £’000 £’000
Equity investments 157,502 157,502 204,694 204,694
157,502 157,502 204,694 204,694
There were no level 2 or 3 investments.

|  | Year to |  | Year to |
| --- | --- | --- | --- |
| 31March 2025 |  | 31March 2024 |  |
|  | £’000 |  | £’000 |

Net (losses)/gains on investments at fair value
Gains on sales 5,167 9,633
Changes in fair value (23,174) 1,504
(18,007) 11,137
TRANSACTION COSTS
During the year, the Company incurred transaction costs of £404,000 (2024: £187,000) and £67,000 (2024: £27,000) on
purchases and sales of investments respectively. These amounts are deducted in determining gains on investments at fair value
as disclosed in the Income Statement.
The Company sold investments in the year with proceeds of £104,969,000 (2024: £47,895,000). The book cost of these
investments when purchased was £99,802,000 (2024: £38,262,000). These investments have been revalued over time until they
were sold, any unrealised gains or losses were included in the fair value of the investments.
10 Debtors

|  | As at |  | As at |
| --- | --- | --- | --- |
| 31March 2025 |  | 31March 2024 |  |
|  | £’000 |  | £’000 |

Prepayments and accrued income 68 87
Dividends receivable 234 225
Sales awaiting settlement 2,151 –
2,453 312
11 Other Creditors

|  | As at |  | As at |
| --- | --- | --- | --- |
| 31March 2025 |  | 31March 2024 |  |
|  | £’000 |  | £’000 |

Other payables 99 134
Accrued interest 35 142
Management fee payable 234 275
Purchases awaiting settlement 974 –
1,342 551
Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025 page 59
12 Fixed Rate Term and Floating Rate Revolving Credit Facilities

|  | As at |  | As at |
| --- | --- | --- | --- |
| 31March 2025 |  | 31March 2024 |  |
|  | £’000 |  | £’000 |

Falling due in 12 months or less –
Fixed rate term loan – 20,000
Revolving credit facility 12,500 –
In the period to 17 December 2024, the Company had a £20,000,000 Fixed Rate Term Loan and £10,000,000 Revolving Credit
Facility with ING Bank N.V.
Fixed Rate Term Loan: The Fixed Rate Term Loan was available for a three-year term to 17 December 2024. The interest was
payable at a fixed rate of 2.49%.
Revolving Credit Facility: The Revolving Credit Facility was available for a three-year term to 17 December 2024. Interest
chargeable was the RFR plus a margin of 1.55% per annum. Undrawn balances were charged at 0.40% per annum.
Following the expiry of these agreements, the Company entered into a two-year £30,000,000 Revolving Credit Facility with Bank
of New York Mellon. Interest chargeable on this facility is daily SONIA plus a margin of 1.3% per annum. Undrawn balances are
charged at 0.12% per annum.
Under the terms of both agreements, the covenants requires that total borrowing will not at any time exceed 30% of the adjusted
NAV, which itself shall not fall below £80,000,000 in respect of both facilities. The Company remained compliant with these
covenants throughout the year.
13 Called-up Share Capital

|  |  | As at |  |  | As at |
| --- | --- | --- | --- | --- | --- |
|  | 31 March |  |  | 31 March |  |
| Number |  | 2025 | Number |  | 2024 |
| of shares |  | £’000 | of shares |  | £’000 |

Ordinary shares of 2p
Ordinary shares in issue at the beginning of the year 167,379,790 3,348 167,379,790 3,348
Ordinary shares bought back to Treasury during the year (24,927,148) (499) – –
Ordinary shares in issue at the end of the year 142,452,642 2,849 167,379,790 3,348
Treasury shares (ordinary shares 2p)
Treasury shares in issue at the beginning of the year – – – –
Ordinary shares bought back to Treasury during the year 24,927,148 499 – –
Treasury shares in issue at the end of the year 24,927,148 499 – –
Total ordinary shares in issue and in Treasury at the end of the year 167,379,790 3,348 167,379,790 3,348
The Company bought back 24,927,148 Ordinary shares into Treasury at a cost of £25,270,000 (2024: no shares bought back into
Treasury). The cost of shares bought back is included in capital reserve and special reserve.
Treasury shares
At the AGM on 25 July 2024, the Company was granted the authority to purchase 25,090,230 Ordinary shares. Following
commencement of the Company’s active share buyback policy, a large proportion of this authority was used.
A General Meeting was held on 31 March 2025, where shareholders approved the authority for the Company to purchase a
further 21,400,393 Ordinary shares.
14 Net Asset Value per Ordinary Share
The Net Asset Value per share of 105.86p (2024: 118.94p) is based on net assets of £150,797,000 (2024: £199,082,000) and on
142,452,642 (2024: 167,379,790) Ordinary shares, being the number of Ordinary shares in issue at the year end.
page 60

Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025

# Notes to the Financial Statements continued
at 31 March 2025

## 15 Analysis of Financial Assets and Liabilities

### Investment Objective and Policy

The Company's investment objective and policy are detailed on page 15.

The Company's investing activities in pursuit of its investment objective involve certain inherent risks. The Company's financial instruments can comprise:

- shares and debt securities held in accordance with the Company's investment objective and policies;
- derivative instruments for efficient portfolio management, gearing and investment purposes; and
- cash, liquid resources and short-term debtors and creditors that arise from its operations.

The risks identified arising from the Company's financial instruments are market risk (which comprises market price risk, interest rate risk and foreign currency exposure risk), liquidity risk and credit and counterparty risk. The Company may enter into derivative contracts to manage risk. The Board reviews and agrees policies for managing each of these risks, which are summarised below.

These policies have remained unchanged since the beginning of the accounting period.

### Market risk

Market risk arises mainly from uncertainty about future prices of financial instruments used in the Company's business. It represents the potential loss the Company might suffer through holding market positions by way of price movements, interest rate movements and exchange rate movements. The Manager assesses the exposure to market risk when making each investment decision and these risks are monitored by the Manager on a regular basis and the Board at quarterly meetings with the Manager.

### Market price risk

Market price risk (i.e. changes in market prices other than those arising from currency risk or interest rate risk) may affect the value of investments.

The Board manages the risks inherent in the investment portfolio by ensuring full and timely reporting of relevant information from the Manager. Investment performance and exposure are reviewed at each Board meeting.

The maximum exposure to market price risk is the fair value of investments of £157,502,000 (2024: £204,694,000).

If the investment portfolio valuation fell by 10% from the amount detailed in the financial statements as at 31 March 2025, it would have the effect, with all other variables held constant, of reducing the net capital return before taxation by £15,750,000 (2024: £20,469,000). An increase of 10% in the investment portfolio valuation would have an equal and opposite effect on the net capital return before taxation. The analysis is based on closing balances only and is not representative of the year as a whole.

### Foreign currency risk

Any income denominated in a foreign currency is converted into Sterling upon receipt. At the Balance Sheet date, all the Company's assets were denominated in Sterling and accordingly the only currency exposure the Company currently has is through the trading activities of its investee companies.

### Interest rate risk

Changes in interest rates may cause fluctuations in the income and expenses of the Company. The Company also has a Floating Rate Revolving Credit Facility.

The Company received £490,000 interest on cash deposits in the year (2024: £431,000).

If interest rates had reduced by 1% from those paid as at 31 March 2025, it would have the effect, with all other variables held constant, of increasing the net revenue return before taxation on an annualised basis by £16,000 (2024: £4,000). If there was an increase in interest rates of 1%, the net revenue return before taxation on an annualised basis would have decreased by £16,000 (2024: £4,000).
Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025 page 61
15 Analysis of Financial Assets and Liabilities continued
Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. The
Manager does not invest in unlisted securities on behalf of the Company. The investments consist of UK smaller companies
which, whilst less liquid than quoted large companies, are quoted and tradeable on a recognised stock exchange.
The Company’s liquidity risk is managed on a daily basis by the Manager in accordance with established policies and procedures in
place. The Manager reviews daily forward-looking cash reports which project cash obligations. As the Company is a closed-ended fund
assets do not need to be liquidated to meet redemptions and sufficient liquidity is maintained to meet obligations as they fall due.
Contractual maturities of the financial liabilities at undiscounted amounts at the year end, based on the earliest date on which
payment can be required, are detailed on page 62.
Gearing can have amplified effects on the NAV of the Company. It can have a positive or negative effect depending on portfolio
performance. It is the Company’s policy to determine the level of gearing appropriate to its own risk profile.
The Manager is responsible for determining the net gearing level within the parameters set by the Board, which is disclosed on
page64. The Directors receive financial information on a regular basis which is used to identify and monitor risk.
Credit risk
Credit risk is the risk of financial loss to the Company if the contractual party to a financial instrument fails to meet its contractual
obligations.
The Company’s listed and traded investments and cash balances are held on its behalf by The Bank of New York Mellon, the
Company’s custodian. Bankruptcy or insolvency of the custodian may cause the Company’s rights with respect to securities held
by the custodian to be delayed. The Board monitors the Company’s risk by reviewing the custodian’s internal controls report.
The Board monitors the credit worthiness of Bank of New York, currently rated at Aa3 (Moody’s).
Investment transactions are carried out with a number of brokers whose creditworthiness is reviewed by the Manager.
Transactions are ordinarily undertaken on a delivery versus payment basis within CREST, whereby the transaction will only settle if
the Company and counterparty details are matching.
The maximum exposure to credit risk at 31March 2025 was:
31March 2025 31March 2024
£’000 £’000
Cash at Bank (held at Bank of New York Mellon) 4,684 14,627
Debtors 2,453 312
7,137 14,939
None of the Company’s assets are past due or impaired.
FINANCIAL ASSETS
The Company’s financial assets consist of listed and traded equity shares, which neither pay interest nor have a maturity date,
cash at bank and short-term debtors. All financial assets are in Sterling.
FINANCIAL LIABILITIES
The Company finances its operations through equity, retained profits and bank borrowings (see Note 12).
The interest rate risk profile of the financial liabilities of the Company as at 31March 2025 was as follows:
Weighted

|  |  | Average |  | Period until |  |  |
| --- | --- | --- | --- | --- | --- | --- |
| Total | interest rate |  |  |  | maturity |  |
| £’000 |  |  | % |  |  | Years |

Amounts drawn down under Fixed Rate Term Loan Facility – – –
Amounts drawn down under Floating Rate Revolving Credit Facility – 5.8 0.1
Financial liabilities upon which no interest is paid 1,342 – –
page 62 Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025
## Notes to the Financial Statements continued
### at 31 March 2025
15 Analysis of Financial Assets and Liabilities continued
The interest rate risk profile of the financial liabilities of the Company as at 31March 2024 was as follows:
Weighted

|  |  | average |  | Period until |  |  |
| --- | --- | --- | --- | --- | --- | --- |
| Total | interest rate |  |  |  | maturity |  |
| £’000 |  |  | % |  |  | Years |

Amounts drawn down under Fixed Rate Term Loan Facility 20,000 2.5 0.7
Amounts drawn down under Floating Rate Revolving Credit Facility – – –
Financial liabilities upon which no interest is paid 551 – –
The maturity profile of the Company’s financial liabilities at undiscounted amount is as follows:
31March 2025 31March 2024
£’000 £’000
In three months or less 12,688 660
In more than three months but not more than one year – 20,249
In more than one year but not more than three years – –
12,688 20,909
16 Capital Management Policies
The structure of the Company’s capital is described on pages 29 and 30 and details of the Company’s reserves are shown in the
Statement of Changes in Equity.
The Company’s capital management objectives are:
### • to ensure that it will be able to continue as a going concern;
### • to achieve capital growth through a focused portfolio of investments, particularly in UK smaller companies; and
• to maximise the return to shareholders while maintaining a capital base to allow the Company to operate effectively and
meet obligations as they fall due.
The Board and the AIFM regularly monitor and review the capital on an ongoing basis. These reviews include:
### • the level of gearing, which takes account of the Company’s position and the Manager’s views on the stock market.
The Company’s objectives, policies and processes for managing capital are unchanged from last year.
The Company is subject to externally imposed capital requirements:
### • As a public company, the Company is required to have a minimum share capital of £50,000; and
### • In accordance with the provisions of Sections 832 and 833 of the Companies Act 2006, the Company as an investment
company:
• is only able to make a dividend distribution to the extent that the assets of the Company are equal to at least one and a
half times its liabilities after the dividend payment has been made; and
• is required to make a dividend distribution each year such that it does not retain more than 15% of the income that it
derives from shares and securities.
These requirements are unchanged since last year and the Company has complied with them at all times.
17 Related Party Transactions
Under the Listing Rules, the Manager is regarded as a related party, owing to the Manager’s controlling party being Charles
Montanaro. Mr Montanaro is deemed to be Key Management Personnel of the Company. The amounts paid to the Manager are
disclosed in Note 3.
The related party transactions with the Directors are set out in the Directors’ Remuneration Report on pages 38 to 40.
Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025 page 63
## AIFMD Disclosures – unaudited
In accordance with the AIFMD, Montanaro and the Company are required to make certain disclosures available to investors in
relation to the Company’s leverage and the remuneration of the Company’s AIFM. In accordance with the Directive, the AIFM’s
remuneration policy is available from Montanaro on request. The Company’s maximum and average actual leverage levels at
31March 2025 are shown below:
Leverage exposure
Gross Commitment
method method
Maximum limit 200% 200%
Actual 104.4% 107.6%
For the purposes of the AIFMD, leverage is any method which increases the Company’s exposure, including the borrowing of
cash and the use of derivatives. It is expressed as a percentage of the Company’s NAV and is calculated on both a gross and
commitment method.
An explanation of the methods used can be found in the glossary of terms on page 66.
The leverage limits are set by the AIFM and approved by the Board and are in line with the maximum leverage levels permitted
in the Company’s Articles. The Manager is also required to comply with the gearing parameters set by the Board in relation to
borrowings. Detailed regulatory disclosures to investors in accordance with the AIFMD are contained on the Company’s website.
The AIFM has sufficient capital and liquid assets to meet the requirements under AIFMD. In addition, the AIFM has professional
liability insurance cover of £5million.
The periodic disclosures to investors as required under the AIFMD are made below:
### • Note 15 to the financial statements set out the risk profile and risk management systems in place. There have been no
changes to the risk management systems in place in the period under review and no breaches of any of the risk limits set,
with no breach expected;
• information on the investment strategy, geographic and sector investment focus and stock exposures are included in the
Manager’s Report on pages 6 to 10; and
### • none of the Company’s assets are subject to special arrangements arising from their illiquid nature.
page 64 Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025
## Alternative Performance Measures (“APMs”) – unaudited
Discount (or Premium) Net Gearing
If the share price of an Investment Trust is less than its Net Net gearing is the total debt, net of cash and equivalents, as a
Asset Value (“NAV”) per share, the shares are trading at a percentage of the total shareholders’ funds.
discount. If the share price is greater than the NAV per share,
31March 2025 31March 2024
the shares are trading at a premium.

|  |  | £’000 | £’000 |
| --- | --- | --- | --- |
| As at 31March 2025, the NAV per share was 105.86p and the | Revolving credit facility 12,500 – |  |  |
| share price was 97.00p. The Discount is therefore calculated at | Fixed rate term loans – 20,000 |  |  |
| 8.4% as shown in the highlights on page 2. | Less: cash at bank (4,684) (14,627) |  |  |

Net debt (a) 7,816 5,373
Gross Assets
Shareholders' funds (b) 150,797 199,082
Gross assets are calculated as net assets adding back
Net gearing (a/b) 5.2% 2.7%
borrowings.
Portfolio Turnover
31March 2025 31March 2024 Calculated using the total purchases plus the sales proceeds
£’000 £’000
divided by two as a percentage of the average net assets
Net assets 150,797 199,082
during the year.
Fixed rate term loans – 20,000
31March 2025 31March 2024
Revolving credit facility 12,500 –
£’000 £’000
Gross assets 163,297 219,082
Purchases at cost 75,784 40,675
Sales proceeds 104,969 47,895
Ongoing Charges (expressed as a percentage)
Total (a) 180,753 88,570
All operating costs expected to be incurred in future and that
are payable by the Company expressed as a proportion of the Average total (b) (b=a/2) 90,377 44,285
average net assets of the Company over the reporting year. Average net assets (c ) 198,155 189,014
The costs of buying and selling investments are excluded, as Portfolio turnover (b/c) 45.6% 23.4%
are interest costs, taxation, non-recurring costs and the costs
of buying back or issuing Ordinary shares.
31March 2025 31March 2024
£’000 £’000
Total expenditure 2,480 2,419
less finance charges (677) (697)
Total (a) 1,803 1,722
Average net assets (b) 198,155 189,014
Ongoing Charges (a/b) 0.91% 0.91%
Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025 page 65
Share Price and NAV per share Returns
Capital Return measures the effect of any rise or fall in the share price or NAV per share, excluding any dividends paid.
Total Return measures the effect of any rise or fall in the share price or NAV per share, plus dividends paid which are reinvested
at the prevailing NAV or share price on the ex- dividend date.

| Share Price Capital Return calculation as at 31 March 2025 |  |  |  |  |  |  |  |  | NAV Capital Return calculation as at 31 March 2025 |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Share price as at 31 March 2025 97.00 (a) |  |  |  |  |  |  |  |  | NAV per share as at 31 March 2025 105.86 (a) |  |  |  |  |  |  |  |  |
| Share price as at 31 March 2024 101.00 (b) |  |  |  |  |  |  |  |  | NAV per share as at 31 March 2024 118.94 (b) |  |  |  |  |  |  |  |  |
| Share Price Capital Return (3.96%) (c) = (a-b)/(b) |  |  |  |  |  |  |  |  | NAV Capital Return (11.00%) (c) = (a-b)/(b) |  |  |  |  |  |  |  |  |
| Share Price impact of dividends reinvested |  |  |  |  |  |  |  |  | NAV impact of dividends reinvested |  |  |  |  |  |  |  |  |
|  | Dividend |  |  |  | Share price at |  |  | Impact of |  | Dividend |  |  |  | NAV per share |  |  | Impact of |
|  | per share |  | Ex-dividend |  | ex-dividend |  |  | dividends |  | per share |  | Ex-dividend |  | at ex-dividend |  |  | dividends |
| Dividend | (pence) |  |  | date |  |  | date | reinvested | Dividend | (pence) |  |  | date |  |  | date | reinvested |
| Quarter 4 |  | 1.19 18 April |  |  |  | 105.50 1.13% |  |  | Quarter 4 |  | 1.19 18 April |  |  |  | 116.30 1.02% |  |  |
| 2024 |  |  |  | 2024 |  |  |  |  | 2024 |  |  |  | 2024 |  |  |  |  |
| Quarter 1 |  | 1.24 18 July |  |  |  | 111.00 1.12% |  |  | Quarter 1 |  | 1.24 18 July |  |  |  | 127.30 0.97% |  |  |
| 2025 |  |  |  | 2024 |  |  |  |  | 2025 |  |  |  | 2024 |  |  |  |  |
| Quarter 2 |  | 1.22 18 October |  |  |  | 105.50 1.15% |  |  | Quarter 2 |  | 1.22 18 October |  |  |  | 121.60 1.00% |  |  |
| 2025 |  |  |  | 2024 |  |  |  |  | 2025 |  |  |  | 2024 |  |  |  |  |
| Quarter 3 |  | 1.78 17 January |  |  |  | 100.00 1.78% |  |  | Quarter 3 |  | 1.78 17 January |  |  |  | 114.70 1.56% |  |  |
| 2025 |  |  |  | 2025 |  |  |  |  | 2025 |  |  |  | 2025 |  |  |  |  |
| 5.18% (d) |  |  |  |  |  |  |  |  | 4.55% (d) |  |  |  |  |  |  |  |  |
| Pre dividend adjustment factor 0.9604 (e) = 1+(c) |  |  |  |  |  |  |  |  | Pre dividend adjustment factor 0.89 (e) = 1+(c) |  |  |  |  |  |  |  |  |
| Dividend adjustment factor (1+(d)) 1.0518 (f) = 1+(d) |  |  |  |  |  |  |  |  | Dividend adjustment factor (1+(d)) 1.0455 (f) = 1+(d) |  |  |  |  |  |  |  |  |
| Share Price total return 1.01% ((e)*(f)-1) |  |  |  |  |  |  |  |  | NAV total return (6.95)% ((e)*(f)-1) |  |  |  |  |  |  |  |  |

page 66 Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025
## Glossary of Terms
Alternative Performance Measure (“APM”) Montanaro, AIFM or Manager
An APM is a numerical measure of the Company’s current, Montanaro Asset Management Limited.
historical or future financial performance, financial position or
cash flows, other than a financial measure defined or specified MUSCIT
in the applicable financial framework. Montanaro UK Smaller Companies Investment Trust PLC.
Articles Net asset value (“NAV”)
Articles of Association of the Company, being its Constitutional The NAV is the shareholders’ funds. Shareholders’ funds are
Document. the total value of all of the Company’s assets, at their current
market value, having deducted all liabilities and prior charges
Commitment method of calculating leverage at their par value, or at their asset value as appropriate. The
Exposure is calculated without the deduction of cash balances NAV per share is calculated by dividing the shareholders’
and after certain hedging and netting positions are offset fundsbythe number of Ordinary shares in issue excluding
against each other. Treasury shares.
Gearing NSCI
Gearing refers to the ratio of the Company’s net debt to its Deutsche Numis Smaller Companies Index (excluding
equity capital. The Company may borrow money to invest in investment companies).
additional investments for its portfolio. If the Company’s assets
grow, the shareholders’ assets grow proportionately more Relative NAV per share performance vs benchmark
because the debt remains the same. This is the difference between the change in the NAV as a
percentage over the year and the Benchmark as a percentage
If the value of the Company’s assets falls, the situation is
over the year.
reversed. Gearing can therefore enhance performance in
rising markets but can adversely impact performance in
fallingmarkets.
Gross method of calculating leverage
Represents the sum of the Company’s positions after
deduction of cash balances, without taking account of any
hedging or netting arrangements.
Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025 page 67
## Shareholder Information
Sources of further information
Your Board is committed to shareholder engagement. To receive regular email news and updates about the Company please
visit: www.montanaro.co.uk/trust/muscit.
Useful information on the Company, such as investor updates and half year and annual reports can also be found on the website.
Key dates
The timing of the announcement and publication of the Company’s results would normally be expected in the following months:
June Annual results for the year ended 31March announced and the Annual Report and Accounts published
July Annual General Meeting
November Half-yearly results to 30September announced and published on the Company’s website
Quarterly dividend
Period ending Declared Payment date
30June July August
30September October November
31December January February
31March April May
NMPI status
The Company currently conducts its affairs so that the shares it issues can be recommended by financial advisers to retail
investors in accordance with the FCA’s rules in relation to non-mainstream pooled investment products. It is intended to
continueto do so for the foreseeable future. The Company’s securities are excluded from the FCA’s restrictions which apply to
non-mainstream pooled investment products because they are securities in a UK listed investment trust.
Share price and NAV
The Company’s Ordinary shares are listed on the main market of the London Stock Exchange. The market price of these shares
can be found in the London Stock Exchange Daily Official List. The Company’s NAV is published daily and released through the
London Stock Exchange’s Regulatory News Service and is available on the Company’s website.
Registrar enquiries
The register for the Ordinary shares is maintained by MUFG Corporate Markets. In the event of queries regarding your holding,
please contact the registrar. You can contact the Registrar by calling 0371 664 0300. Calls are charged at the standard geographic
rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. Lines are
open between 09:00 – 17:30, Monday to Friday excluding public holidays in England and Wales. Or alternatively you may contact
the Registrar at shareholderenquiries@cm.mpms.mufg.com.
Changes of name must be notified in writing to the registrar, whose address is: MUFG Corporate Markets, Central Square,
29Wellington Street, Leeds, LS1 4DL. Change of address can be updated online via www.signalshares.com.
Common Reporting Standard
Under the Common Reporting Standard financial institutions, including investment trust companies, are required to provide
personal information to HMRC on investors who meet certain criteria set out in the legislation. On an annual basis, the Company
will provide information to the local tax authority on the tax residencies of non-UK based certificated shareholders and corporate
entities. The local tax authority may exchange this information with the tax authorities of another country or countries in which
the shareholder may be a tax resident, where those countries, or the tax authorities in those countries, have entered into
agreements to exchange financial account information. New shareholders, excluding those whose shares are held in CREST,
entered on the Company’s share register, will be sent a certification form for the purposes of collecting this information.
Share dealing
Investors wishing to purchase more shares in the Company or to sell all or part of their existing holding may do so through their
financial adviser, stockbroker or, if financial advice is not required, through a fund supermarket or any other execution-only
platform. Further information can be found at: www.montanaro.co.uk/trust/muscit.
page 68 Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025
## Shareholder Information continued
Data protection
The Company is committed to protecting and respecting the confidentiality, integrity and security of the personal data it holds.
For information on the processing of personal data, please see the privacy policy on the website at www.montanaro.co.uk.
Nominee code
Where shares are held in a nominee company name, the Company undertakes:
• to provide the nominee company with multiple copies of shareholder communications, so long as an indication of quantities
has been provided in advance; and
• to allow investors holding shares through a nominee company to attend general meetings, provided the correct authority
from the nominee company is available; and nominee companies are encouraged to provide the necessary authority to
underlying shareholders to attend the Company’s general meetings.
AIC
The Company is a member of the Association of Investment Companies.
Stocks and Shares Individual Savings Accounts (ISA)
ISAs are a tax-efficient method of investment and the Company’s shares are eligible investments for inclusion in an ISA.
Warning to shareholders – beware of share fraud
Fraudsters use persuasive and high-pressure tactics to lure investors into scams. They may offer to sell shares that turn out to be
worthless or to buy shares at an inflated price in return for an upfront payment.
If you receive unsolicited investment advice or requests:
• Check the Financial Services Register at www.fca.org.uk to see if the person or firm contacting you is authorised by the
Financial Conduct Authority (‘FCA’).
• Call the FCA on 0800 111 6768 if the firm does not have contact details on the Register or you are told they are out of date.
### • Search the list of unauthorised firms to avoid at www.fca.org.uk/scams.
### • Consider that if you buy or sell shares from an unauthorised firm you will not have access to the Financial Ombudsman
Service or Financial Services Compensation Scheme.
### • Think about getting independent financial and professional advice.
If you are approached by fraudsters please tell the FCA by using the share fraud reporting form at www.fca.org.uk/scams where
you can find out more about investment scams. You can also call the FCA Consumer Helpline on 0800 111 6768.
If you have already paid money to share fraudsters you should contact Action Fraud on 0300 123 2040.
Independent Financial Advisers
The Company conducts its affairs so that its Ordinary shares can be recommended by Independent Financial Advisers (“IFAs”)
to ordinary retail investors in accordance with the FCA’s rules relating to non-mainstream investment products and intends to
continue to do so.
Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025 page 69
## Notice of Annual General Meeting
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR URGENT ATTENTION. If you are in any doubt about any aspect of the
proposals referred to in this document or about the action which you should take, you should seek your own advice immediately
from a stockbroker, solicitor, accountant or other independent professional adviser authorised under the Financial Services and
Markets Act 2000 if you are in the United Kingdom or, if not, from another appropriately authorised financial adviser. If you have
sold or otherwise transferred all of your shares, please pass this document, together with the accompanying documents, to the
purchaser or transferee, or to the person who arranged the sale or transfer, so they can pass these documents to the person
who now holds the shares.
Notice is hereby given that the Annual General Meeting (“AGM”) of Montanaro UK Smaller Companies Investment Trust PLC
(the“Company”) will be held at 53 Threadneedle Street, London EC2R 8AR, on Wednesday, 23 July 2025 at 10 a.m. for the
purposes of considering and, if thought fit, passing the following resolutions, of which resolutions 1 to 11 will be proposed as
Ordinary Resolutions and resolutions 12 to 14 will be proposed as Special Resolutions.
ATTENDANCE AT THE MEETING
Shareholders intending to attend the AGM and are asked to register their intention as soon as practicable by emailing the
Company Secretary at the email address provided below.
SHAREHOLDER ENGAGEMENT
For shareholders unable to attend the AGM who wish to ask the Board or the Investment Manager any questions, we request
that you do so by either email to: cosec@junipartners.com, or by post, by writing to: The Company Secretary, Juniper Partners,
28Walker Street, Edinburgh EH3 7HR. Those questions which are submitted before Monday, 21 July 2025 will be answered ahead
of the AGM and we will endeavour to answer any questions subsequently received as soon as possible. Any presentation given by
the Investment Manager at the AGM will be published on our website: www.montanaro.co.uk/trust/muscit beforehand.
PROXIES
Whether you intend to attend the AGM in person or not we encourage all shareholders to complete and submit a proxy form
appointing “the Chair of the meeting” as their proxy. This will ensure that your vote will be counted if ultimately you (or any
other proxy you might otherwise appoint) are not able to attend the meeting. You may request a hard copy Form of Proxy
from the Company’s registrars, MUFG Corporate Markets (please refer to the notes to the Notice of Meeting). To be valid, the
form of proxy should be completed, signed and returned in accordance with the instructions printed thereon, as soon as
possible, and in any event to reach the Registrar no later than 48 hours before the time of the AGM, or any adjournment of
that meeting.
page 70 Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025
## Notice of Annual General Meeting continued
ORDINARY RESOLUTIONS
RESOLUTION 1 – ANNUAL REPORT AND ACCOUNTS
To receive and, if thought fit, to accept the Strategic Report, the Directors’ Report, the Independent Auditor’s Report and the
audited accounts of the Company for the year ended 31March 2025.
RESOLUTION 2 – DIRECTORS’ REMUNERATION REPORT
To receive and approve the Directors’ Remuneration Report for the year ended 31March 2025.
RESOLUTION 3 – DIRECTORS’ REMUNERATION POLICY
To approve the Directors’ Remuneration Policy as set out in the Directors’ Remuneration Report on pages 38 to 40.
RESOLUTION 4 – DIVIDEND POLICY
To approve the Company’s Dividend Policy.
RESOLUTION 5 – RE-ELECTION OF DIRECTOR
To re-elect Arthur Copple as a Director of the Company.
RESOLUTION 6 – RE-ELECTION OF DIRECTOR
To re-elect Catriona Hoare as a Director of the Company.
RESOLUTION 7 – RE-ELECTION OF DIRECTOR
To re-elect Yuuichiro Nakajima as a Director of the Company.
RESOLUTION 8 – RE-ELECTION OF DIRECTOR
To re-elect Barbara Powley as a Director of the Company.
RESOLUTION 9 – RE-APPOINTMENT OF AUDITOR
To re-appoint BDO LLP as Independent Auditor to the Company to hold office from the conclusion of this Meeting until the
conclusion of the next Annual General Meeting at which financial statements are laid before the Company.
RESOLUTION 10 – AUDITOR’S REMUNERATION
To authorise the Directors of the Company to determine the remuneration of the Independent Auditor.
RESOLUTION 11 – AUTHORITY TO ALLOT SHARES
THAT the Directors of the Company be and are hereby generally and unconditionally authorised (in substitution for any
authorities previously granted to the Directors to the extent unused) pursuant to Section 551 of the Companies Act 2006 (the
“Act”), to exercise all the powers of the Company to allot shares and to grant rights to subscribe for, or to convert any security
into, shares in the Company (“Rights”) up to an aggregate nominal amount of £258,892 (being approximately 10% of the issued
share capital, excluding Treasury shares, as at 13June 2025) provided that the authorities conferred on the Directors shall, unless
renewed, varied or revoked by the Company in a general meeting, expire at the conclusion of the next Annual General Meeting
of the Company after the passing of this resolution, save that the Company may before such expiry make offers or agreements
which would or might require shares to be allotted or Rights to be granted after such expiry and the Directors may allot shares
or grant Rights in pursuance of such offers or agreements as if the authority conferred hereby had not expired. The Directors will
use this authority when it is in the best interests of the Company to issue Ordinary shares for cash and will only issue new shares
at a price representing a premium to the NAV per share at the time of issuance.
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025

page 71

# SPECIAL RESOLUTIONS

# RESOLUTION 12 – DISAPPLICATION OF PRE-EMPTION RIGHTS

THAT, subject to the passing of Resolution 11 (and in substitution for all subsisting authorities to the extent unused but without prejudice to the exercise of any such power prior to the date hereof), the Directors be and are hereby empowered pursuant to Section 570 and Section 573 of the Companies Act 2006 (the “Act”) to allot equity securities (within the meaning of Section 560 of the Act) and to sell equity securities held by the Company as Treasury shares (as defined in Section 724 of the Act) for cash pursuant to the authority conferred by Resolution 11 as if Section 561 of the Act did not apply to any such allotment and of sales of equity securities, provided that this power:

- (a) shall expire at the conclusion of the Company’s next Annual General Meeting after the passing of this resolution, save that the Company may before such expiry make an offer or agreement which would or might require equity securities to be allotted after such expiry and the Directors may allot equity securities in pursuance of any such offer or agreement as if the power conferred by this resolution had not expired;
- (b) shall be limited to the allotment of equity securities and/or sale of equity securities held in Treasury for cash up to an aggregate nominal amount of £258,892 (being approximately 10% of the issued share capital (excluding Treasury shares) as at 13 June 2025); and
- (c) shall authorise the Directors to issue equity securities at such issue price as the Directors may determine (including, without limitation, where equity securities are being issued from Treasury at a price below the net asset value per Ordinary share (including income) of the Company at the time of the relevant issue).

# RESOLUTION 13 – AUTHORITY TO BUY BACK SHARES

THAT in substitution for the Company’s existing authority to make market purchases of Ordinary shares in the capital of the Company (“Ordinary shares”), the Company be and is hereby generally and unconditionally authorised in accordance with Section 701 of the Companies Act 2006 (the “Act”) to make market purchases (within the meaning of Section 693(4) of the Act) of Ordinary shares, provided that:

- (i) the maximum number of Ordinary shares hereby authorised to be purchased shall be 19,403,953, or if less, that number of Ordinary shares which is equal to 14.99% of the number of shares in issue immediately following the passing of this resolution;
- (ii) the minimum price (excluding expenses) which may be paid for each Ordinary share is the nominal value of that share;
- (iii) the maximum price (excluding expenses) payable by the Company for each Ordinary share is the higher of (i) 105% of the average closing market value of the Ordinary shares in the Company as derived from the Daily Official List of the London Stock Exchange, for the five business days prior to the date of the market purchase and (ii) the higher of the price of the last independent trade and the highest current independent bid on the London Stock Exchange;
- (iv) the authority hereby conferred shall expire at the conclusion of the Annual General Meeting of the Company in 2026 unless such authority is renewed prior to such time; and
- (v) the Company may make a contract to purchase Ordinary shares under the authority hereby conferred prior to the expiry of such authority which will or may be executed wholly or partly after the expiration of such authority and may make a purchase of Ordinary shares pursuant to any such contract.

All Ordinary shares purchased pursuant to the above authority shall be either:

- (i) held, sold, transferred or otherwise dealt with as Treasury shares in accordance with the provisions of the Act; or
- (ii) cancelled immediately upon completion of the purchase.

# RESOLUTION 14 – GENERAL MEETING NOTICE PERIOD

That the Company be and is hereby generally and unconditionally authorised to hold general meetings (other than annual general meetings) on 14 clear days’ notice, such authority to expire at the conclusion of the next Annual General Meeting of the Company.

By order of the Board

# JUNIPER PARTNERS LIMITED

Company Secretary

16 June 2025

28 Walker Street

Edinburgh EH3 7HR
page 72 Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025
## Notice of Annual General Meeting continued
Explanation of Notice of Annual General Meeting
Resolution 1 – To receive the Annual Report and Accounts
The Directors are required to present the annual accounts, Strategic Report, Directors’ Report and Auditor’s Report to the
meeting. These are contained in the Company’s Annual Report and Accounts for the year ended 31March 2025 (the Annual
Report). A resolution to receive the financial statements, together with the Strategic Report, Directors’ Report and the Auditor’s
Report on those accounts is included as an Ordinary Resolution.
Resolutions 2 and 3 – Remuneration
Advisory resolutions to approve the Directors’ Remuneration Report and the Remuneration Policy (as set out in the Annual
Report) are included.
Resolution 4 – Dividend Policy
To approve the Company’s dividend policy to continue to pay four quarterly interim dividends. Further details on the timings of
each quarterly dividend can be found in the Shareholder Information section on pages 67 to 68.
Resolutions 5 to 8 – Re-election of Directors
In line with the recommendations of the 2019 AIC Corporate Governance Code, all Directors of the Company are required to
retire and offer themselves for re-election at each AGM. In accordance with this requirement, Mr Copple, Ms Hoare, Mr Nakajima
and Mrs Powley will retire and offer themselves for re-election as Directors.
All of the Directors seeking re-election are recommended by the Board for re-election. Full biographies of all of the Directors are
set out in the Annual Report on pages 25 and 26 and are also available for viewing on the Company’s website www.montanaro.
co.uk/trust/muscit. The Nomination and Remuneration Committee considered the Directors’ performance and recommended
their re-election and the Board agrees that it is in the best interests of shareholders that each of the Directors be re-elected.
Resolutions 9 and 10 – Re-appointment and remuneration of Auditor
At each meeting at which the Company’s financial statements are presented to its members, the Company is required to appoint
an auditor to serve until the next such meeting. The Board, on the recommendation of the Audit and Management Engagement
Committee, recommends the re-appointment of BDO LLP as Auditor to the Company. The Auditor’s re-appointment will be
proposed to the AGM as Resolution 9. Resolution 10 authorises the Audit and Management Engagement Committee to fix the
Auditor’s remuneration.
Resolution 11 – Authority to allot Ordinary shares
Resolution 11 authorises the Board to allot Ordinary shares generally and unconditionally in accordance with Section 551 of the
Companies Act 2006 (the “Act”) up to an aggregate nominal value of £258,892, representing approximately 10% of the issued
Ordinary share capital at the date of the Notice. This authority shall expire at the next AGM when a resolution will be proposed to
renew the authority.
Resolution 12 – Authority to disapply pre-emption rights
Resolution 12 is a Special Resolution which is being proposed to authorise the Directors to disapply the pre-emption rights of
existing Shareholders in relation to issues of Ordinary shares under Resolution 12 (being in respect of Ordinary shares up to an
aggregate nominal value of £258,892, representing approximately 10% of the Company’s issued Ordinary share capital as at the
date of the Notice). This authority shall expire at the next AGM.
The Directors will only allot new Ordinary shares pursuant to the authorities proposed to be conferred by Resolutions 11 and 12
if they believe it is advantageous to the Company’s shareholders to do so and will only issue new shares at a price representing a
premium to the NAV per share at the time of issuance.
Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025 page 73
Resolution 13 – Purchase of own shares
Resolution 13 is a Special Resolution which will grant the Company authority to make market purchases of up to 19,403,953
Ordinary shares, representing 14.99% of the Ordinary shares in issue as at the date of the Notice. The Ordinary shares bought
back will either be cancelled or placed into Treasury, at the determination of the Directors. The maximum price which may be
paid for each Ordinary share must not be more than the higher of (i) 105% of the average of the market value of an ordinary
share for the five business days immediately preceding the day on which the purchase is made or (ii) the value of an Ordinary
share calculated on the basis of the higher price quoted for: (a) the last independent trade of; and (b) the highest current
independent bid for any number of Ordinary shares on the trading venue where the purchase is carried out. The minimum price
which may be paid for each Ordinary share is £0.02.
It is the Board’s intention that any shares bought back by the Company will be held in Treasury and will only be re-issued from
Treasury either at a price representing a premium to the NAV per share at the time of re-issue, or at a discount to the NAV
per share, provided that such discount is lower than the weighted average discount to the NAV per share when they were
bought back by the Company. Any Treasury shares re-issued must also be at an absolute profit. The Directors will only consider
repurchasing shares in the market if they believe it to be in shareholders’ interests and as a means of correcting any imbalance
between supply and demand for the Company’s shares. Any decisions regarding placing shares into Treasury, or selling shares
from Treasury, will be taken by the Directors.
This authority shall expire at the next AGM, when a resolution to renew the authority will be proposed.
Resolution 14 – Notice period for general meetings
Resolution 14 is being proposed to enable general meetings to be held on 14 clear days’ notice. The minimum notice period for
listed company general meetings is 21 clear days, but companies have an ability to reduce this period to 14 clear days (otherthan
for annual general meetings), provided that the company offers facilities for shareholders to vote by electronic means and that
there is an annual resolution of shareholders approving the reduction in the minimum period for notice of general meetings
(other than annual general meetings) from 21 clear days to 14 clear days. The Board is therefore proposing Resolution 14 as a
special resolution to ensure that the minimum required period for notice of general meetings of the Company (other than annual
general meetings) is 14 clear days. The Directors believe it is in the best interests of the shareholders of the Company to preserve
the shorter notice period, although it is intended that this flexibility will be used only for non-routine business and where merited
in the interests of shareholders as a whole. The approval will be effective until the Company’s next Annual General Meeting when
it is intended that a similar resolution will be proposed.
page 74 Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025
## Notice of Annual General Meeting continued
The following notes explain your general rights as a shareholder and your right to attend and vote at this Meeting or to appoint
someone else to vote on your behalf.
1. To be entitled to vote at the Meeting (and for the purpose of the determination by the Company of the number of votes
they may cast), shareholders must be registered in the Register of Members of the Company at close of trading on Monday,
21July 2025. Changes to the Register of Members after the relevant deadline shall be disregarded in determining the rights
of any person to attend and vote at the Meeting.
2. Shareholders are entitled to appoint another person as a proxy to exercise all or part of their rights to attend and to speak
and vote on their behalf at the Meeting. A shareholder may appoint more than one proxy in relation to the Meeting provided
that each proxy is appointed to exercise the rights attached to a different Ordinary share or Ordinary shares held by that
shareholder. A proxy need not be a shareholder of the Company.
3. In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment
submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint
holders appear in the Company’s Register of Members in respect of the joint holding (the first named being the most senior).
4. A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against
the resolution. If no voting indication is given, your proxy will vote or abstain from voting at his or her discretion. Your proxy
will vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the Meeting.
5. You can vote either:
(i) by logging on to www.signalshares.com and following the instructions; or
(ii) you may request a hard copy form of proxy directly from the registrars, MUFG Corporate Markets via email at
shareholderenquiries@cm.mpms.mufg.com or Tel: 0371 664 0300. Calls are charged at the standard geographic rate
and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. Lines are
open between 09:00 – 17:30, Monday to Friday, excluding public holidays in England and Wales; and
(iii) in the case of CREST members, by utilising the CREST electronic proxy appointment service in accordance with the
procedures set out below. In order for a proxy appointment to be valid a form of proxy must be completed. In each case
the form of proxy must be received by MUFG Corporate Markets at PXS 1, Central Square, 29 Wellington Street, LEEDS,
LS1 4DL by 12 noon on Monday, 21 July 2025.
6. If you return more than one proxy appointment, either by paper or electronic communication, the appointment received last
by the Registrar before the latest time for the receipt of proxies will take precedence. You are advised to read the terms and
conditions of use carefully. Electronic communication facilities are open to all shareholders and those who use them will not
be disadvantaged.
7. The return of a completed form of proxy, electronic filing or any CREST Proxy Instruction (as described in Note 8 below) will
not prevent a shareholder from attending the Meeting and voting in person if he/she wishes to do so.
8. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do
so for the Meeting (and any adjournment of the Meeting) by using the procedures described in the CREST Manual (available
from www.euroclear.com. CREST Personal Members or other CREST sponsored members, and those CREST members who
have appointed a service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to
take the appropriate action on their behalf.
9. In order for a proxy appointment or instruction made by means of CREST to be valid, the appropriate CREST message
(a “CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear UK & International Limited’s
specifications and must contain the information required for such instructions, as described in the CREST Manual. The
message must be transmitted so as to be received by the issuer’s agent (ID RA10) by 12 noon on Monday, 21 July 2025. For
this purpose, the time of receipt will be taken to mean the time (as determined by the timestamp applied to the message
by the CREST application host) from which the issuer’s agent is able to retrieve the message by enquiry to CREST in the
manner prescribed by CREST. After this time, any change of instructions to proxies appointed through CREST should be
communicated to the appointee through other means.
Montanaro UK Smaller Companies Investment Trust PLC Annual Report and Accounts 2025

page 75

10. CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear UK & International Limited does not make available special procedures in CREST for any particular message. Normal system timings and limitations will, therefore, apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member, or sponsored member, or has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting system providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.

11. Any person to whom this notice is sent who is a person nominated under section 146 of the Companies Act 2006 (the "2006 Act") to enjoy information rights (a "Nominated Person") may, under an agreement between him/her and the member by whom he/she was nominated, have a right to be appointed (or to have someone else appointed) as a proxy for the Annual General Meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he/she may, under any such agreement, have a right to give instructions to the member as to the exercise of voting rights.

12. Any corporation which is a shareholder can appoint one or more corporate representatives who may exercise on its behalf all of its powers as a shareholder provided that no more than one corporate representative exercises powers in relation to the same shares.

13. As at 13 June 2025 (being the latest practicable business day prior to the publication of this Notice), the Company's Ordinary issued share capital consists of 129,445,983 Ordinary shares of 2 pence each, carrying one vote each. Therefore, the total voting rights in the Company as at 13 June 2025 are 129,445,983.

14. Under Section 527 of the Companies Act 2006, shareholders meeting the threshold requirements set out in that section have the right to require the Company to publish on a website a statement setting out any matter relating to: (i) the audit of the Company's financial statements (including the Auditor's Report and the conduct of the audit) that are to be laid before the Meeting; or (ii) any circumstances connected with an Auditor of the Company ceasing to hold office since the previous meeting at which annual financial statements and reports were laid in accordance with Section 437 of the Companies Act 2006 (in each case) that the shareholders propose to raise at the relevant meeting. The Company may not require the shareholders requesting any such website publication to pay its expenses in complying with Sections 527 or 528 of the Companies Act 2006. Where the Company is required to place a statement on a website under Section 527 of the Companies Act 2006, it must forward the statement to the Company's auditor not later than the time when it makes the statement available on the website. The business which may be dealt with at the Meeting for the relevant financial year includes any statement that the Company has been required under Section 527 of the Companies Act 2006 to publish on a website.

15. Any shareholder attending the Meeting has the right to ask questions. The Company must cause to be answered any such question relating to the business being dealt with at the Meeting but no such answer need be given if: (a) to do so would interfere unduly with the preparation for the Meeting or involve the disclosure of confidential information; (b) the answer has already been given on a website in the form of an answer to a question; or (c) it is undesirable in the interests of the Company or the good order of the Meeting that the question be answered.

16. Copies of the Directors' letters of appointment are available for inspection during normal business hours at the registered office of the Company on any business day from the date of this Notice until the time of the Meeting and may also be inspected at the Meeting venue, as specified in this Notice, from 11.45 am on the day of the Meeting until the conclusion of the Meeting.

17. You may not use any electronic address (within the meaning of Section 333(4) of the Companies Act 2006) provided in either this Notice or any related documents (including the form of proxy) to communicate with the Company for any purposes other than those expressly stated.

18. Personal data provided by shareholders at or in relation to the Meeting will be processed in line with the Company's privacy policy.

A copy of this Notice, and other information required by Section 311A of the Companies Act 2006, can be found on the Company's website at www.montanaro.co.uk/trust/muscit.
page 76 Montanaro UK Smaller Companies Investment Trust PLC    Annual Report and Accounts 2025
## Advisers

| AIFM AND INVESTMENT MANAGER | DEPOSITARY |
| --- | --- |
| Montanaro Asset Management Limited | The Bank of New York Mellon |
| 53 Threadneedle Street | (International) Limited |
| London EC2R 8AR | 160 Queen Victoria Street |
| Tel: 020 7448 8600 | London EC4V 4LA |

Fax: 020 7448 8601
Website: www.montanaro.co.uk
CUSTODIAN
Email: enquiries@montanaro.co.uk
Bank of New York Mellon SA/NV
160 Queen Victoria Street
ADMINISTRATOR London EC4V 4LA
Juniper Partners Limited
28 Walker Street
BANKER
Edinburgh EH3 7HR
Bank of New York Mellon (International Limited)
Tel: 0131 378 0500
London Branch
160 Queen Victoria Street
COMPANY SECRETARY London EC4V 4LA
Juniper Partners Limited
28 Walker Street
BROKER
Edinburgh EH3 7HR
Cavendish Financial Plc
Tel: 0131 378 0500
One Bartholomew Close
Email: cosec@junipartners.com
London EC1A 7BL
REGISTERED OFFICE
AUDITOR
53 Threadneedle Street
BDO LLP
London EC2R 8AR
55 Baker Street
London W1U 7EU
REGISTRAR
MUFG Corporate Markets
LAWYERS
Central Square,
Gowling WLG
29 Wellington Street,
4 More London Riverside
Leeds LS1 4DL
London SE1 2AU
Tel: 0371 664 0300
Calls are charged at the standard geographic rate
and will vary by provider.
Email: shareholderenquiries@cm.mpms.mufg.com
Website: www.mpms.mufg.com
Montanaro UK Smaller Companies Investment Trust PLC
Registered in England and Wales No. 3004101
An investment company as defined under Section 833 of the
Companies Act 2006
Montanaro UK Smaller Companies Investment Trust PLC
53 Threadneedle Street
London EC2R 8AR
Tel: 020 7448 8600
Fax: 020 7448 8601
E-mail: enquiries@montanaro.co.uk
Website: www.montanaro.co.uk