Lse Asl 2017

Aberforth Smaller Companies Trust plc
Annual Report and Financial Statements

31 December 2017
Contents
Strategic Report
Investment Objective 1
Financial Highlights 1
Chairman’s Statement 2
Investment Policy and Strategy 4
Principal Risks and Viability Statement 5
Key Performance Indicators 6
Managers’ Report 8
Thirty Largest Investments 13
Investment Portfolio 14
Portfolio Information 17
Governance Report
Board of Directors 18
Directors’ Report 19
Corporate Governance Report 23
Audit Committee Report 27
Directors’ Remuneration Policy 30
Directors’ Remuneration Report 31
Directors’ Responsibility Statement 33
Financial Report
Independent Auditor’s Report 34
Income Statement 38
Reconciliation of Movements in Shareholders’ Funds 39
Balance Sheet 40
Cash Flow Statement 41
Notes to the Financial Statements 42
Notice of the Annual General Meeting 52
Shareholder Information & Glossary 54
Investor Disclosure Document

The EU Alternative Investment Fund Managers Directive (AIFMD) requires certain information to be made available to
investors prior to their investment in the shares of the Company. The Company’s Investor Disclosure Document, which is
available for viewing at www.aberforth.co.uk, contains details of the Company’s investment objective, policy and strategy
together with leverage and risk policies.
Strategic Report
The Board is pleased to present the Strategic Report on pages 1 to 17 which incorporates the Chairman’s Statement and
Managers’ Report. It has been prepared by the Directors in accordance with Section 414 of the Companies Act 2006, as
amended.
Investment Objective
The investment objective of Aberforth Smaller Companies Trust plc (ASCoT) is to achieve a net asset value total return
(with dividends reinvested) greater than that of the Numis Smaller Companies Index (excluding Investment Companies)
(NSCI (XIC) or benchmark) over the long term.
The Company has appointed Aberforth Partners LLP as the investment managers. Further information can be found on
page 19.
Total Return Performance

Year to 31 December 2017
%
Net Asset Value per Ordinary Share2 22.1

Numis Smaller Companies Index (excl. Investment Companies) 19.5
Ordinary Share Price2 22.6
Financial Highlights
31 December 31 December %
2017 2016 Change
Shareholders’ Funds1 £1,436m £1,220m 17.7

Market Capitalisation2 £1,233m £1,047m 17.8
Actual Gearing employed1 0.3% 2.7% N/A
Ordinary Share net asset value1 1,543.72p 1,292.57p 19.4
Ordinary Share price2 1,326.00p 1,109.00p 19.6
Ordinary Share discount2 14.1% 14.2% N/A
Revenue Return per Ordinary Share1 41.59p 36.93p 12.6
Dividends per Ordinary Share1 35.5p 30.10p 17.9
Return attributable to equity shareholders per Ordinary Share1 279.32p 65.82p 324.4
Ongoing Charges2 0.76% 0.80% N/A
Portfolio Turnover2 21.9% 17.3% N/A
1 UK GAAP Measure 2 Alternative Performance Measure (refer to glossary on page 56)
Absolute Performance over past year

(figures are total returns and have been rebased to 100 at 31 December 2016)
125
120
115
110
105
100
95
Dec-16 Mar-17 Jun-17 Sep-17 Dec-17
NAV Benchmark Share Price
Strategic Report Aberforth Smaller Companies Trust plc 1

Chairman’s Statement
Review of 2017 performance

Confounding many a sceptic, 2017 proved to be a positive year for returns from UK smaller companies. The FTSE 100
Index gave a total return of 11.9%, while the return of the FTSE All-Share Index, which is heavily weighted towards large
companies, was 13.1%. By comparison, the Numis Smaller Companies Index excluding Investment Companies (NSCI
(XIC)), the Company’s benchmark, produced a return of 19.5%. The Company’s net asset value total return was 22.1%,
which reflects the return attributable to equity shareholders of 279.32p (2016: 65.82p), together with the effect of
dividends received by them and reinvested. The share price generated a total return of 22.6%.
The Managers’ Report expands in more detail on 2017’s performance.
Dividends
The Board remains committed to a progressive dividend policy. In this context, the Board is pleased to propose a final
ordinary dividend of 19.75p. Total ordinary dividends of 28.80p for 2017 represent a 5.3% increment when compared with
2016 and a level 51.6% above the 19.0p that was declared for 2010 in the immediate aftermath of the financial crisis.
I have included 2010 dividend levels and subsequent growth to attempt to bring some context to what has undoubtedly
been a golden period for dividends from small UK quoted companies. To put this period into a historical context, long run
data from the London Business School for the NSCI (XIC) would suggest dividends since 1955 have grown at 2.7% per
annum in real terms.
In 2015 and 2016, alongside the ordinary dividend declared, the Company also paid a special dividend of 2.75p each year,
thereby ensuring that the all-important minimum retention test imposed by HMRC was passed. The Board adopted such
a strategy to avoid the pitfalls of allowing non-recurring revenue streams to become embedded into the progressive
dividend policy, especially since special dividends and non-recurring distributions have been more prevalent following the
financial crisis.
In 2017, the Company was once again a beneficiary of special dividends and, in particular, the decision from one of our
investee companies to declare five dividends in 2017. This year, the Board will declare a special dividend of 6.70p per
share alongside the total ordinary dividend of 28.80p to ensure the retention test is met.
The revenue return for the year was 41.59p (2016: 36.93p) per Ordinary Share. After adjusting for both the final ordinary
and special dividends, the Company’s revenue reserves will be 59.5p per share, circa 2.1x the ordinary dividend; in 2010,
revenue reserves were circa 1.3x the ordinary dividend. Strengthened revenue reserves, and prudent management of the
non-recurring revenue streams of recent years, leave the Board optimistic that a progressive dividend policy can be delivered
to Shareholders. The ambition behind this strategy, and perhaps its acid test, will be for the Board to deliver dividend growth
through the next downturn. I would re-iterate my comments from previous years that the base level for the Company’s
progressive dividend policy in 2018 is on the total ordinary dividend of 28.80p, i.e. excluding the special dividend.
Share buy-in
At the Annual General Meeting in March 2017, the authority to buy in up to 14.99% of the Company’s Ordinary Shares
was approved. During the year, 1,404,155 Ordinary Shares (1.5% of the issued share capital) were bought in at a total
cost of £18.1m. Consistent with the Board’s stated policy, those Ordinary Shares have been cancelled rather than held
in Treasury. Once again, the Board will be seeking to renew the buy-in authority at the Annual General Meeting on
1 March 2018.
Within the broader Investment Companies universe, the UK Smaller Companies sub-sector has languished in rating
terms, with discounts stuck in the low to mid-teen range. Currently, uncertainty about Brexit and politics appear to be
trumping both economics and underlying corporate profitability. Against such a backdrop, 2017 witnessed a higher level
of buy-ins than in previous years. At the margin, buy-ins provide an increase in liquidity for those Shareholders seeking
to crystallise their investment and at the same time deliver an economic uplift for those Shareholders wishing to remain
invested with the Company.
Gearing
It has been the Company’s policy to use gearing in a tactical manner throughout its 27 year history. The £125m facility
with The Royal Bank of Scotland has a term expiring in June 2020. As has been the case in the past, the facility term
dovetails with the three yearly continuation vote cycle. The facility continues to provide the Company with access to
liquidity for investment purposes and to fund share buy-ins as and when appropriate. In an illiquid, and at times volatile,
asset class such as small UK quoted companies, having access to immediate funds through a credit facility provides the
Managers with enhanced flexibility.
2 Strategic Report Aberforth Smaller Companies Trust plc

Chairman’s Statement
Board changes
David Jeffcoat, who has been a Director since July 2009 and Chairman of the Audit Committee since 2011, will not be
standing for re-election at the forthcoming Annual General Meeting. David has made a great contribution to the Board,
and his colleagues and the Managers will miss his incisive questioning. Shareholders can be grateful for his contribution
over the past nine years. The Board wishes him all the very best for the future.
A recruitment process, being run by the Board, is well advanced.
Outlook
Since becoming Chairman in October 2014, my January statement to Shareholders has regularly referred to the uncertain
political environment. In this relatively short period, the Company has operated against a backdrop of two referendums
and two general elections. Regrettably, 2018 feels like more of the same as a minority government seeks to make
progress with the Brexit negotiations.
In economic terms, the environment has been more conducive as, despite a slowing UK economy, we have witnessed an
acceleration and synchronisation of global growth – indeed, one might regard the biggest fear as being the extent of the
consensus about the supportive conditions for further progress. Around the world, we have seen several central banks
shift gears and raise interest rates. In financial markets, this has fuelled the debate between inflation and deflation to
which I referred in last year’s statement. As a consequence, the tension between equity and bond valuations remains
at the forefront of asset allocators’ minds. As with political uncertainties, I would envisage such tensions to be resolved
over several years but their significance should not be underestimated for investment managers such as Aberforth
Partners who follow a value investing style.
Over the past 12 months, the Company has produced a good result despite difficult conditions for the value investing
style. As an asset class, small UK quoted companies have perhaps missed out, owing to politics and Brexit, on the sort
of re-rating witnessed in the broader financial markets. As represented by the NSCI (XIC), they look to be selling at
around a 34% price/earnings discount to their larger brethren. Since the Company’s formation in 1990, only the period
during and in the aftermath of the Long Term Credit Management crisis in 1998 has this discount been meaningfully
wider. Driven by the Managers’ value investing style, the Company’s portfolio provides additional valuation support.
There seems always to be the opportunity to comment on regulation, although in many years I resist the temptation.
This year, however, sees the noteworthy introduction of the Key Information Document under the Packaged Retail and
Insurance-based Investment Products Regulation. While this regulation is undoubtedly well intended, I share the
concerns expressed by others that it may be some time before these rules achieve their intended objective, not least
until the same rules apply consistently to open ended funds. I look forward to the year when no comment on the
regulatory environment is possible.
The Board looks forward with cautious optimism, cognisant of the uncertain times prevailing but reassured by the
consistency of approach and professionalism of the Managers.
Finally, the Board very much welcomes the views of Shareholders and we are available to talk to you directly. My email
address is noted below and I extend my thanks to those of you who have been in touch with me over the past year.
Paul Trickett
Chairman
26 January 2018
paul.trickett@aberforth.co.uk

Investment Policy and Strategy
Investment Policy
The Company aims to achieve its objective by investing in small UK quoted companies. These are companies with a
market capitalisation, at time of purchase, equal to or lower than that of the largest company in the bottom 10% of the
main UK equity market or companies in the NSCI (XIC). At 1 January 2018 (the date of the last annual index rebalancing),
the index included 350 companies, with an aggregate market capitalisation of £169 billion. Its upper market
capitalisation limit was £1.5 billion, although this limit will change owing to movements in the stockmarket. If any
holding no longer falls within this definition of a small company, its securities will become candidates for sale.
Portfolio risk is spread by diversification of holdings in individual companies: the portfolio will usually have holdings in
over 80 small UK quoted companies. The Company may, at time of purchase, invest up to 15% of its assets in any one
security. However, in practice, each investment will typically be substantially less and, at market value, represent less
than 5% of the portfolio on an on-going basis.
The Company’s policy towards companies quoted on the Alternative Investment Market (AIM) generally precludes
investment, except either where an investee company moves from the “Main Market” to AIM (so as to avoid being a
forced seller) or where a company quoted on AIM has committed to move from AIM to the “Main Market” (so as to
enable investment before a full listing is obtained). The Company does not invest in any unquoted companies or in any
securities issued by investment trusts or investment companies, with the exception of real estate investment trusts that
are eligible for inclusion in the NSCI (XIC).
The Managers aim to keep the Company near fully invested in equities at all times and there will normally be no attempt
to engage in market timing by holding high levels of liquidity. The Company may employ gearing. The Board, in
conjunction with the Managers, is responsible for determining the parameters for gearing. When considered
appropriate, gearing is used tactically in order to enhance returns. The Company currently has a £125m three year bank
facility in place and the level of gearing has, during 2017, ranged from nil to 3.8%. Further details can be found in note
13 to the Financial Statements.
The Board believes that small UK quoted companies continue to provide opportunities for positive total returns over the
long term. Any material changes to the Company’s investment objective and policy will be subject to Shareholder
approval.
Investment Strategy
The Managers adhere to a value investment philosophy. In practice, this approach utilises several valuation metrics,
recognising that flexibility is required when assessing businesses in different industries and that buyers of these
businesses may include other corporates as well as stockmarket investors. As a result of this philosophy, the Company’s
holdings will usually be on more attractive valuations than the average for the NSCI (XIC). While there is good evidence
that a value approach within small UK quoted companies results in superior returns over the long term, there can be
extended periods when the value style is out of favour.
The Managers select companies for the portfolio on the basis of fundamental or “bottom-up” analysis. Analysis involves
scrutiny of businesses’ financial statements and assessment of their market positions. An important part of the process
is regular engagement with board members of prospective and existing investments. Holdings are sold typically when
their valuations reach targets determined by the Managers.
In order to improve the odds of achieving the investment objective, the Managers believe that the portfolio must be
adequately differentiated from the benchmark index. Therefore, within the diversification parameters described in
Investment Policy, the Managers regularly review the level of differentiation, with the aim of maximising the active
weight of each holding within the portfolio.
Dividend Policy
The Board confirms its commitment to a policy of progressive dividends. In addition, in order to qualify as an investment
trust, the Company must not retain more than 15% of its income from any financial year. The Company will pay an
interim dividend in August each year based on the forecast net revenue position for the current financial year. A final
dividend, subject to shareholder approval, is then paid in March each year based on the actual net income for the
financial year just ended and the future earnings forecasts.

Principal Risks
The Board carefully considers risks faced by the Company and seeks to manage these risks through continual review,
evaluation, mitigating controls and taking action as necessary.
Investment in small companies is generally perceived to carry more risk than investment in large companies. While this
is reasonable when comparing individual companies, it is much less so when comparing the risks inherent in diversified
portfolios of small and large companies. In addition, the Company has a simple capital structure and outsources all the
main operational activities to recognised, well-established firms.
The principal risks faced by the Company, together with the approach taken by the Board towards them, have been
summarised below. Further information regarding the review process can be found in the Corporate Governance and
Audit Committee Reports.
(i) Investment policy/performance risk – the Company’s portfolio is exposed to share price movements owing to the
nature of its investment policy and strategy. The performance of the investment portfolio will typically differ from
the performance of the benchmark and will be influenced by market related risks including market price and
liquidity (refer to Note 19 for further details). The Board’s aim is to achieve the investment objective over the long
term by ensuring the investment portfolio is managed appropriately. The Board has outsourced portfolio
management to experienced managers with a clearly defined investment philosophy and investment process. The
Board receives regular and detailed reports on investment performance including detailed portfolio analysis, risk
profile and attribution analysis. Senior representatives of Aberforth Partners attend each Board meeting. Peer group
performance is also regularly monitored by the Board.
(ii) Share price discount – investment trust shares tend to trade at discounts to their underlying net asset values but a
significant share price discount, or related volatility, could reduce shareholder returns and confidence. The Board
and the Managers monitor the discount on a daily basis both in absolute terms and relative to ASCoT’s peers. The
Board intends to continue to buy in shares as stated in the Chairman’s Statement.
(iii) Gearing risk – in rising markets, gearing will enhance returns; however, in falling markets the gearing effect will
adversely affect returns to Shareholders. The Board and the Managers consider the gearing strategy and associated
risk on a regular basis.
(iv) Reputational risk – the Board and the Managers monitor external factors outwith the Company’s control affecting
the reputation of the Company and/or the key service providers and take action if appropriate.
(v) Regulatory risk – failure to comply with applicable legal and regulatory requirements could lead to suspension of
the Company’s share price listing, financial penalties or a qualified audit report. A breach of Section 1158 of the
Corporation Tax Act 2010 could lead to the Company losing investment trust status and, as a consequence, any
capital gains would then be subject to capital gains tax. The Board receives quarterly compliance reports from the
Secretaries to evidence compliance with rules and regulations, together with information on future developments.
The Board closely monitors political developments and, in particular, is mindful of the continuing uncertainty
following the UK referendum result to leave the EU.
Viability Statement
The Directors have assessed the viability of the Company over the five years to December 2022, taking account of the
Company’s position, its investment strategy, and the potential impact of the relevant principal risks detailed above.
Based on this assessment, the Directors have a reasonable expectation that the Company will meet its liabilities as they
fall due and be able to continue in operation, notwithstanding that the Company's shareholders are to vote on the
continuation of the Company in 2020.
In making this assessment, the Directors took comfort from the results of a series of stress tests that considered the
impact of a number of severe market downturn scenarios on the Company’s financial position and, in particular, its
ability to settle projected liabilities of the Company as they fall due. The Company invests in companies listed and traded
on the London Stock Exchange. These shares are actively traded and, whilst less liquid than larger quoted companies, the
portfolio is well diversified by both numbers of holdings and industry sector. The Directors determined that a five year
period to December 2022 is an appropriate period for which to provide this statement given the Company’s long term
investment objective, the simplicity of the business model, the resilience demonstrated by the stress testing and the
relatively low working capital requirements.

Key Performance Indicators
The Board assesses the Company’s performance in meeting its objective against key performance indicators (also
referred to as Alternative Performance Measures): net asset value total return; share price total return; relative
performance; and share price discount to net asset value. Information on the Company’s performance is provided in the
Chairman’s Statement and Managers’ Report and a record of these measures is shown below. In addition to the above,
the Board considers the share price discount against its investment trust peer group each day. A glossary of these
Alternative Performance Measures can be found on page 56.
Historic Total Returns

Discrete Annual Returns (%)
Period NAV Index Share Price
1 year to 31 December 2017 22.1 19.5 22.6
1 year to 31 December 2016 5.8 11.1 -4.2
1 year to 31 December 2015 10.2 10.6 13.9
1 year to 31 December 2014 -0.7 -1.9 0.1
1 year to 31 December 2013 52.4 36.9 62.0
1 year to 31 December 2012 31.9 29.9 43.9
1 year to 31 December 2011 -13.5 -9.1 -18.5
1 year to 31 December 2010 26.6 28.5 22.8
1 year to 31 December 2009 44.4 60.7 59.2
1 year to 31 December 2008 -39.6 -40.8 -38.3
Annualised Cumulative
Returns (%) Returns (%)
Share Share
Periods to 31 December 2017 NAV Index Price NAV Index Price
2 years from 31 December 2015 13.7 15.2 8.4 29.2 32.7 17.4
27.1 years from inception
on 10 December 1990 13.9 11.5 13.4 3,296.7 1,788.6 2,876.0
Ten Year Summary

Net asset Revenue Dividends
Value per Share per Ordinary per Ordinary Ongoing
As at Share Price Discount Share Share Charges Gearing
31 December p p % p p % %
2017 1,543.7 1,326.00 14.1 41.59 35.50 0.76 0.3
2016 1,292.6 1,109.00 14.2 36.93 30.10 0.80 2.7
2015 1,254.3 1,193.00 4.9 35.03 28.75 0.79 0.3
2014 1,161.4 1,072.00 7.7 27.24 24.75 0.82 2.8
2013 1,193.2 1,095.00 6.7 27.37 23.50 0.79 2.6
2012 802.8 695.50 13.4 26.07 22.25 0.81 5.9
2011 627.3 501.00 20.1 24.13 20.75 0.88 11.1
2010 743.8 632.50 15.0 18.11 19.00 0.85 7.3
2009 605.9 534.00 11.9 17.35 19.00 0.85 7.7
2008 437.7 351.25 19.7 22.75 19.00 0.94 9.5
2007 743.9 587.00 21.1 18.38 15.20 0.86 –

Key Performance Indicators
Ten Year Investment Summary
Absolute Performance Relative Performance

(figures are total returns and have been rebased to 100 at 31 Dec 2007) (figures are total returns and have been rebased to 100 at 31 Dec 2007)
350 130
300
120
250
110
200
100
150
90
100
50 80
08 09 10 11 12 13 14 15 16 17 08 09 10 11 12 13 14 15 16 17
NAV Benchmark Share Price NAV v Benchmark Share Price v Benchmark
Dividends and RPI Growth Premium/Discount

(figures have been rebased to 100 at 31 Dec 2007) (being the difference between Share Price and NAV)
200 5%
Premium
0%
175 Discount
5%
150
10%
125
15%
20%
100
75 25%
08 09 10 11 12 13 14 15 16 17 08 09 10 11 12 13 14 15 16 17
RPI Dividends Premium/Discount of Share Price to NAV

Managers’ Report
Introduction
ASCoT rode the wave of rising equity valuations around the world in 2017 and delivered a strong performance in both
absolute and relative terms. Its NAV total return was 22.1%, which may be compared with 19.5% for its benchmark, the
NSCI (XIC), and with 13.1% for the FTSE All-Share index, which is a gauge of the performance of larger companies.
All of ASCoT’s relative gains were secured in the first half of the year: as the year progressed, conditions became more
hostile to the value investor, details of which are provided in the Investment Performance section of this report. That
the value style should have encountered such headwinds is at one level surprising. One of the most notable
developments of 2017 was the synchronisation of economic recovery around the globe, with all major economies
enjoying GDP growth for the first time since the financial crisis. While the rate of progress of the US economy eased, tax
reform offers the prospect of renewed impetus. Meanwhile, Chinese activity benefited from a bout of stimulus and,
perhaps more significantly, the Eurozone returned to growth as the impact of quantitative easing was finally felt. The
broad trend of improvement was seized upon promptly by the equity markets and has been termed the “reflation trade”.
Its sustainability was, however, brought into question by the words and actions of the world’s central banks, apparently
keen to display their inflation-fighting credentials. Three interest rate rises in the US have been accompanied by
commentary on how and when the Federal Reserve’s balance sheet, bloated by quantitative easing, might be run down.
To date, the Eurozone has seen no action but plenty of rhetoric, while the UK has witnessed its first interest rate rise for
ten years. It is to be hoped that the central banks are not too focused on fighting yesterday’s war and that they have
judged the risks of runaway economic activity and inflation accurately. In this regard, a bit more nervousness on the part
of government bond markets might have been encouraging: yields in 2017 were essentially unchanged and thus remain
at extremely low levels in a historical context. The behaviour of bond investors suggests that the “reflation trade” is
merely another of those false dawns to have punctuated the period since the financial crisis and that underlying
economic issues of debt and demographics are so intractable as to condemn the world to very low rates of economic
growth for years to come.
Such prospects are some of the factors contributing to the emergence of reactionary populism around the globe, though,
again, bond investors appear little concerned by the inflationary effects of populist policies. To be fair, a useful test-case
of populism, the UK’s EU referendum, has hardly been a cause of concern for bond markets. There was no implosion in
the immediate aftermath of the vote, but the second order effects of sterling’s devaluation are now permeating the
economy: inflation is picking up, real wages are coming back under pressure and to this extent the outlook for real
growth is deteriorating. Though GDP growth forecasts should be taken with a pinch of salt, the trajectory that has taken
the UK from the fastest growing G7 nation in 2014 to the slowest in 2017 is hardly encouraging. Meanwhile, the
government is in a difficult position, undermined by the outcome of the general election, riven ideologically by differing
views on the EU and inevitably focused on divorce negotiations.
Against this complicated background, investment in small UK quoted companies in 2017 was remarkably
straightforward. Leaving aside for now a small number of highly valued growth stocks, the most important issue was the
split of exposure to those companies earning their profits overseas and those that rely on the domestic economy. To
have had a lot of the former, which benefited from the weak pound and saw their profits expand to historically high
levels, was a significant boost to investment returns. ASCoT was a beneficiary and its experience is described in the
Investment Performance section of this report.
Investment Performance
ASCoT’s NAV total return in 2017 was 22.1%; the NSCI (XIC)’s was 19.5%. The table below analyses the difference
between these two figures, while the subsequent paragraphs provide more detail on how ASCoT’s performance was
achieved.
For the 12 months ended 31 December 2017 Basis points
Stock selection 412
Sector selection (70)
Attributable to the portfolio of investments, based on mid prices 342
(after transaction costs of 22 basis points)
Movement in mid to bid price spread (47)
Cash/gearing 25
Purchase of ordinary shares 23
Management fee (79)
Other expenses (6)
Total attribution based on bid prices 258
Note: 100 basis points = 1%. Total Attribution is the difference between the total return of the NAV and the Benchmark Index (i.e. NAV = 22.08%;
Benchmark Index = 19.50%; difference is 2.58% being 258 basis points).

Managers’ Report
Style
The dynamics behind the “reflation trade” of 2017 should have been conducive to a strong relative performance from
the value style. While this was indeed the case in the early months of the year, the growth style fought back as
government bond yields failed to respond. For the year as a whole, analysis of data from both the London Business
School (LBS) and Style Research points to significant headwinds for the value style; indeed, the LBS model suggests it was
the ninth worst year since 1955. In this context, ASCoT’s positive relative performance might be considered so surprising
as to call into question the Managers’ dedication to value investment. However, two other factors – size and sectors
described below – offered mitigation and some strong individual stock selection numbers, as illustrated in the table
above, helped the portfolio’s performance exceed that of the benchmark. The experience of 2017 also usefully
illustrates the difference of approach between the third-party models and Aberforth in determining value: the former
use only price to book, while the Managers’ methodology encompasses other valuation metrics, notably the ratio of
enterprise value to earnings before interest, tax and amortisation. Nevertheless, the chance of ASCoT overcoming a
repeat of such adverse conditions for the value style is not high.
Size
The size factor within the NSCI (XIC) was a slight boost to ASCoT’s returns in 2017. The NSCI (XIC) represents the bottom
tenth of the UK stockmarket by value and includes companies with market capitalisations up to around £1.5 billion. It
thus overlaps with the FTSE 250 index. At the start of 2017 this overlap represented 62% of the value of the NSCI (XIC).
In 2017, the performance of the FTSE 250 stocks within the NSCI (XIC), its larger constituents, was very slightly behind
that of its smaller constituents. This was to ASCoT’s advantage, albeit to a modest degree, since 59% of its portfolio was
invested in “smaller small” companies at the start of the 2017. The reason for this disposition is the valuation premium
accorded to larger companies and set out in the Valuation section of this report. While the superior returns from
“smaller smalls” reduced their valuation advantage in 2017, it remains wide and with the bottom-up prospects for these
businesses still positive, the portfolio enters 2018 in a familiar shape with regard to size.
Sectors
The crucial sector issue in 2017 was the divergent performance of overseas and domestic companies. As noted above,
relative performance was improved by a comparatively high exposure to those companies earning their money outside
the UK. At the start of the year, 47% of the aggregate sales of ASCoT’s portfolio holdings was generated overseas, more
than the 41% for the NSCI (XIC). As a gauge of the benefit afforded by this positioning, the NSCI (XIC) may be divided
into groups of sectors determined by where these sectors earn their money and the performance of these groups may
be compared. The overseas group enjoyed a total return of 32% in 2017, whereas the domestic group’s return was 19%.
Sterling’s weakness after the EU referendum explains the gap: the overseas group benefited from the translation of
profits at more favourable exchange rates and almost two thirds of the companies therein have seen profit expectations
for 2017 raised since the referendum; in contrast, the domestic group has had to contend with the impact of sterling on
inflation and real wages, so that only one third of its companies has enjoyed higher estimates.
The net effect has been a widening valuation premium of overseas exposed companies to domestics, even though
sterling itself was unchanged on a trade weighted basis in 2017. At the margin, this has motivated the Managers to bias
purchases through the latter part of the year to the domestics, always taking into account the likelihood of more
challenging trading conditions in the UK economy. However, experience suggests that the stockmarket is prone to
overreact and when strong businesses with a domestic bias but attractive financial characteristics and defendable
market positions are significantly de-rated the Managers are willing to commit capital. So far, this re-orientation of the
portfolio, which is consistent with the application of a value investment philosophy, has been modest, with the portfolio
at the start of 2018 still generating 46% of its aggregate sales from overseas.
Stocks
In 2017’s challenging environment for the value style, the portfolio’s exposure to “smaller small” companies and to
overseas earners offered some mitigation. However, stock selection also played an important role, as the table at the
top of this section makes clear. In last year’s Managers’ Report, it was argued that “for ASCoT to generate superior
returns for its shareholders, getting more investment decisions right than wrong … probably does the job”. While over
time the Managers’ investment approach and experience can hopefully ensure that this deceptively unambitious target
is met, it is fair to state that good fortune played a part in the high stock contribution in 2017. Despite an uptick in profit
warnings across the stockmarket as the year progressed, ASCoT encountered few serious declines in share prices and,
on the other hand, saw its patience rewarded with unusually large rises in the valuations of some of the long-standing
holdings into which capital had been fed steadily over time.

Managers’ Report
Additionally, the stockmarket offered several opportunities to take advantage of the de-ratings of previously inherently
strong but highly valued businesses whose trading difficulties had precipitated substantial share price falls. While
holdings in these businesses were taken with a five year investment horizon, in some cases the actual holding period
proved much shorter as trading improved and the stockmarket chose once again to re-rate the prospects of the company
in question. When the stockmarket will yield such opportunities in the future is uncertain. What is certain is that there
will be years in which, despite the consistent application of the value investment philosophy through a seasoned
investment process, stock selection will prove as unrewarding as it was rewarding in 2017.
Corporate activity
With 17 bids for NSCI (XIC) constituents completed or outstanding at the end of the year, M&A activity in 2017 was at a
similar level to that of 2016. Both these years undershot the 27 deals that took place in 2015 and it is tempting to
attribute some of the slowdown since then to the uncertainties stemming from the EU referendum, even though the
weakness of sterling ought to add to the appeal of UK assets to overseas buyers. Of the 17 bid situations, ASCoT held
six, though in three cases the announcement of the approach and thus the boost to the share prices came at the end of
2016. Overall, M&A was a very small boost to returns in 2017.
The number of initial public offerings in 2017 was 21, which represents a modest rise on the previous year. ASCoT does
not often participate in IPOs but did take part in two of the 2017 deals. In both cases, the Managers judged that the
valuation offered sufficient compensation for the informational advantage usually enjoyed by the private equity sellers
of the businesses.
Balance sheets
For much of the last ten years, the small UK quoted company universe has been characterised by strong and
strengthening balance sheets, which inevitably reflected the impact of the financial crisis on the thinking of company
directors. In the last three years, however, there have been indications of less caution. In the case of ASCoT’s portfolio,
this is manifest in the proportion of the portfolio that is invested in companies with net cash on their balance sheets,
which has declined from 35% in 2014 to 21% at the end of 2017. For the Managers, this development is on balance
positive, since it is driven by more investment, returns of surplus cash and, though not to be welcomed in every case,
acquisitions. Clearly, however, higher leverage brings risks, particularly if it coincides with an economic downturn.
Comfort may be derived from the portfolio’s bias to businesses with less than two times leverage (net debt divided by
earnings before interest, tax, depreciation and amortisation), which was almost 75% at the end of 2017. Those with
higher leverage ratios tend to be property companies, though the portfolio always has some exposure to more highly
indebted businesses where the potential upside justifies the additional risk.
Income
The table below splits the portfolio’s holdings into categories that are determined by each company’s most recent
dividend announcement. The profile is familiar from similar analyses in recent years: a small minority of dividend cutters,
the persistence of several nil payers and a bias to companies that most recently increased their dividends. The “Other”
category includes companies that have returned to the dividend register or that have paid dividends for the first time
and that therefore do not have a meaningful comparative payment in the previous year.
Down Nil payers No change Increase Other
7 13 22 41 3
The portfolio’s dividend experience reflects what remains a buoyant backdrop for dividends across the universe of small
UK quoted companies. Robust balance sheets and dividend cover of 2.8x for the portfolio, are supportive of further
increases, though it would seem likely that the rate of dividend growth across the NSCI (XIC) is moderating from the low
double digits of recent years to mid to high single digits. However, in comparison with inflation, this degree of progress
remains well above the 62 year average real dividend growth from smaller companies of 2.7%.
Turnover
Portfolio turnover in 2017 was 22%, which is up from 17% in 2016. It is often the case that headline turnover is
influenced by situations in which ASCoT is effectively required to sell, notably through an M&A approach or when an
investee company grows too large for continued inclusion in the NSCI (XIC). Adjusting for these, underlying turnover in
2017 was 17%, compared with 12% in 2016. This increase was correlated with the improvement in investment
performance. Consistent with their value investment philosophy, the Managers strive to rotate capital from holdings
that have performed well and are close to their target valuations into companies with depressed valuations and greater
upside. This basic dynamic ought to benefit returns, but it can only be put into action if the broad stockmarket is inclined
to re-rate ASCoT’s holdings, as was the case in 2017.

Managers’ Report
Active share
Active share is a measure of how different a portfolio is from an index. It is calculated as half of the sum of the absolute
differences between each stock’s weighting in an index and its weighting in the portfolio. A higher active share would
indicate that a portfolio has a better chance of performing differently from the index, for better or worse. The Managers
target a ratio of at least 70% for ASCoT in relation to the NSCI (XIC) and at the end of December the ratio was 77%
(2016: 76%).
Valuations
The strength of equity markets in 2017 has seen valuations rise and, as the table below sets out, the universe of small
UK quoted companies has participated in this trend. The 14.3x PE of the NSCI (XIC) at the end of December was 6% above
its average since 1990 of 13.5x, while the 12.5x PE of ASCoT’s portfolio was 4% above its 12.0x long term average. While
neither the asset class nor the portfolio is significantly above normal, the same cannot be claimed of large companies.
The historical PE of the FTSE All-Share at the end of 2017 was 21.7x, which is 42% above its average since 1990. This PE
reflects the implicit expectation of strong profit growth from large companies in coming months, helped by the
translation of overseas profits at lower sterling exchange rates, by the restructuring undertaken in recent times by
resources companies and by the effect of rising commodity prices on these companies’ profits.
31 December 2017 31 December 2016

Portfolio Characteristics ASCoT NSCI (XIC) ASCoT NSCI (XIC)
Number of companies 86 350 87 349

Weighted average market capitalisation £712m £878m £617m £800m
Price earnings ratio or PE (historic) 12.5x 14.3x 11.3x 12.5x
Dividend yield (historic) 2.9% 2.8% 3.0% 2.8%
Dividend cover 2.8x 2.5x 3.0x 2.9x
The following table sets out the forward valuations of ASCoT’s portfolio and the tracked universe, which is the set of
stocks covered closely by the Managers and represents 97% by value of the NSCI (XIC). The valuation metric – the ratio
of enterprise value to earnings before interest, tax and amortisation (EV/EBITA) – is the one favoured by the Managers.
As should be expected of a portfolio put together in accordance with a value investment philosophy, ASCoT’s holdings
are cheaper than the tracked universe as a whole and much cheaper than a subset of 44 growth stocks: at the end of
December, the premium of the growth stocks to the portfolio was 74% on the basis of 2018 estimates.
EV/EBITA 2017 2018 2019
ASCoT 12.1x 10.4x 9.0x
Tracked universe (285 stocks) 14.2x 12.8x 11.3x
- 44 growth stocks 21.8x 18.1x 16.0x
- 241 other stocks 13.2x 12.0x 10.6x
The final valuation table highlights a valuation anomaly that has persisted for several years. Despite the superior returns
from “smaller small” companies in 2017, the lowest valuations in the UK stockmarket are still accorded to the smallest
companies and, as a consequence, ASCoT’s exposure to those companies is higher than that of the NSCI (XIC) as a whole.
In the Managers’ experience, the present relationship is unusual: in the years before the financial crisis, the superior
growth of “smaller small” companies tended to be rewarded by higher valuations. However, many investors are today
nervous about illiquidity and are reluctant to commit to the stockmarket’s smaller denizens. ASCoT’s status as a closed
end fund allows it to take a longer term view, a strategy that paid off in 2017.
Market capitalisation range: < £100m £100-250m £250-500m £500-750m > £750m
Portfolio weight 3% 15% 25% 22% 35%
Tracked universe weight 1% 5% 18% 15% 61%
Tracked universe 2018 EV/EBITA 7.4x 10.3x 11.4x 12.2x 13.9x

Managers’ Report
Conclusion & outlook
In broad terms, today’s universe of small UK quoted companies can be split into three groups, a framework that has been
useful for the majority of time since the financial crisis.
• The first comprises secular growth companies, whose valuations benefit from the low discount rates that encourage
investors to extend their investment horizons well beyond historical norms. Decent memories are now required of
the last time that capital became effectively costless for growth companies during the TMT boom. This is not to
deny the existence of some truly outstanding business franchises among the technology behemoths of the US and
China or even, indeed, within the NSCI (XIC). However, experience suggests that capital does not remain costless
indefinitely, that many growth businesses are being valued as if they are the next Amazon and that few businesses
succeed in retaining high stockmarket valuations for extended periods.
• The second group comprises companies whose growth is low but dependable and that tend to pay out a large
proportion of their profits as dividends. Before the financial crisis these would have been described pejoratively as
“dull” or “ersatz bonds” and, condemned to low valuations, might have fitted into a value portfolio. However, since
the advent of quantitative easing with its suppressive effect on bond yields, the increasingly desperate search for
income has seen them re-rated to high valuations.
• The final group is everything else – the rump of companies that are lowly valued, typically cyclical, often reliant on
the domestic economy, sometimes illiquid and thus uncomfortable for many investors to own. None of these
characteristics means that these are all poor businesses that face an existential threat. Some will undoubtedly fall
victim to the forces of disruption and these are to be avoided, unless prevailing valuations exaggerate the rate of
decline and offer an opportunity for investment. However, many members of this group boast defendable market
positions, volatile but good returns on capital through the cycle and the opportunity to grow though not necessarily
year-in-year-out. For better or worse, these are the typical holdings of a small cap value fund just now.
An implication of this characterisation is that the big-picture issues of macroeconomics, government bond yields and
politics are at present disproportionately influential on the valuations of the three groups that make up the universe of
small UK quoted companies. The uncertainties stemming from the EU referendum play a part, but the more significant
influence remains the extraordinary monetary policies that anchor bond yields in many parts of the world at very low
levels. As long as this continues to be the case, issues specific to individual businesses are likely to play a secondary role
in determining ASCoT’s returns, though the experience of 2017 suggests that stock selection can make a difference with
the help of some good fortune.
So what might move the world’s major bond markets? A year ago, a reasonable response, though one that appeared
unlikely to come to pass, might have mentioned a bout of synchronised global growth accompanied by higher inflation,
tax cuts for the world’s largest economy and monetary tightening. And yet government bond markets are unyielding.
Perhaps in the face of a decades-long bull market in bonds, which has only intensified since the financial crisis, more
convincing evidence is required and perhaps 2017’s “reflation trade” will be condemned to the same fate as 2013’s
“great rotation”. Financial markets certainly remain set up for more of the same: corporate bond spreads are extremely
narrow, equity markets are led by a small number of beneficiaries of low rates and, to judge by the world of small UK
quoted companies, funds tend to be heavily biased to those favourite stocks. With its commitment to value investment,
ASCoT continues to stand apart and in doing so is arguably as relevant as at any point in its 27 year history.
Aberforth Partners LLP

Managers
26 January 2018

Thirty Largest Investments
As at 31 December 2017
Value % of Total
No. Company £’000 Net Assets Business Activity
1 Vesuvius 52,338 3.6 Metal flow engineering

2 Bovis Homes Group 44,454 3.1 Housebuilding
3 Brewin Dolphin Holdings 39,890 2.8 Private client fund manager
4 FirstGroup 39,102 2.7 Bus & rail operator
5 Coats Group 38,497 2.7 Manufacture of threads
6 Vitec Group 34,637 2.4 Photographic & broadcast accessories
7 Keller 32,480 2.3 Ground engineering services
8 Urban&Civic 32,375 2.3 Property - investment & development
9 Grainger 31,784 2.2 Property - residential rentals
10 TT Electronics 31,490 2.2 Sensors & other electronic components
Top Ten Investments 377,047 26.3
11 Huntsworth 31,059 2.2 Public relations
12 Robert Walters 30,053 2.1 Recruitment
13 Computacenter 29,859 2.1 IT services
14 RPS Group 28,082 2.0 Energy & environmental consulting
15 Just Group 26,480 1.8 Individually underwritten annuities
16 Senior 26,427 1.8 Aerospace & automotive engineering
17 Nostrum Oil & Gas 26,393 1.8 Oil & gas exploration and production
18 Future 25,841 1.8 Special interest consumer publisher
19 Restaurant Group 25,230 1.8 Restaurant operator
20 Northgate 25,025 1.7 Van rental
Top Twenty Investments 651,496 45.4
21 Wincanton 24,817 1.7 Logistics
22 Bodycote 24,774 1.7 Engineering - heat treatment
23 Forterra 24,106 1.7 Manufacture of bricks
24 Spirent Communications 23,715 1.7 Telecoms test equipment
25 Essentra 22,429 1.6 Filters & packaging products
26 Hogg Robinson Group 22,313 1.5 Travel & expense management
27 Speedy Hire 22,188 1.5 Plant hire
28 EnQuest 21,586 1.5 Oil & gas exploration and production
29 International Personal Finance 20,588 1.4 Home credit provider
30 De La Rue 19,831 1.4 Bank note printer
Top Thirty Investments 877,843 61.1
Other Investments (56) 562,653 39.2
Total Investments 1,440,496 100.3
Net Liabilities (4,854) (0.3)
Total Net Assets 1,435,642 100.0

Investment Portfolio
Value % of Total % of NSCI

Security £’000 Net Assets (XIC)3
Oil & Gas Producers 56,719 3.9 2.6

EnQuest 21,586 1.5
Hardy Oil & Gas 1,120 0.1
Nostrum Oil & Gas 26,393 1.8
Soco International 7,620 0.5
Oil Equipment, Services & Distribution 10,252 0.7 1.1
Gulf Marine Services 10,252 0.7
Chemicals 6,953 0.5 1.7
Carclo 6,953 0.5
Industrial Metals & Mining 0 – –
International Ferro Metals1 0 –
Mining 23,972 1.7 2.5
Anglo Pacific Group 18,730 1.3
Gem Diamonds 5,242 0.4
Kenmare Resources Warrants 20192 0 –
Construction & Materials 72,675 5.1 4.9
Eurocell 16,089 1.1
Forterra 24,106 1.7
Keller 32,480 2.3
Aerospace & Defence 33,122 2.3 2.6
Senior 26,427 1.8
Ultra Electronics Holdings 6,695 0.5
General Industrials 99,207 6.9 0.9
Coats Group 38,497 2.7
Low & Bonar 8,372 0.6
Vesuvius 52,338 3.6
Electronic & Electrical Equipment 50,693 3.5 2.1
Morgan Advanced Materials 19,203 1.3
TT Electronics 31,490 2.2
Industrial Engineering 71,375 4.9 2.1
Bodycote 24,774 1.7
Castings 11,964 0.8
Vitec Group 34,637 2.4
Industrial Transportation 24,817 1.7 2.3
Wincanton 24,817 1.7
Support Services 214,259 14.9 11.3
Capital Drilling 2,370 0.2
Connect Group 13,611 0.9
De La Rue 19,831 1.4
Essentra 22,429 1.6
Hogg Robinson Group 22,313 1.5
Management Consulting Group 2,835 0.2
Menzies (John) 8,208 0.6
Northgate 25,025 1.7
Robert Walters 30,053 2.1
RPS Group 28,082 2.0
SIG 17,314 1.2
Speedy Hire 22,188 1.5
Automobiles & Parts – – 0.8
Beverages – – 0.7


Food Producers 20,791 1.4 2.8

Devro 530 –
R.E.A. Holdings 7,180 0.5
Bakkavor Group 9,048 0.6
Greencore Group 4,033 0.3
Household Goods & Home Construction 44,454 3.1 3.5
Bovis Homes Group 44,454 3.1
Leisure Goods 7,883 0.5 0.9
Games Workshop Group 7,883 0.5
Personal Goods – – 1.6
Health Care Equipment & Services – – 1.9
Pharmaceuticals & Biotechnology 16,005 1.1 2.0
Vectura Group 16,005 1.1
Food & Drug Retailers 19,478 1.4 1.0
McColl’s Retail Group 19,478 1.4
General Retailers 78,393 5.6 6.1
Carpetright 8,400 0.6
DFS Furniture 11,145 0.8
Dunelm Group 11,329 0.8
Halfords Group 12,606 0.9
N Brown Group 12,971 0.9
Pendragon 12,233 0.9
Topps Tiles 9,709 0.7
Media 77,539 5.4 4.3
Centaur Media 6,446 0.4
Future 25,841 1.8
Huntsworth 31,059 2.2
Trinity Mirror 12,585 0.9
Wilmington Group 1,608 0.1
Travel & Leisure 137,452 9.7 7.8
Air Partner 4,314 0.3
ei group 10,146 0.7
FirstGroup 39,102 2.7
Flybe Group 8,807 0.6
Go-Ahead Group 19,480 1.4
Mitchells & Butlers 18,050 1.3
Restaurant Group 25,230 1.8
Stagecoach Group 12,323 0.9
Fixed Line Telecommunications 8,963 0.6 1.8
KCOM Group 8,963 0.6
Electricity – – 0.7
Banks – – 3.5
Nonlife Insurance 6,635 0.5 1.8
Sabre Insurance Group 6,635 0.5
Life Insurance 33,142 2.3 0.4
Hansard Global 6,662 0.5
Just Group 26,480 1.8
Real Estate Investment & Services 83,440 5.8 5.7
Grainger 31,784 2.2
U and I Group 19,281 1.3
Urban&Civic 32,375 2.3


Real Estate Investment Trusts 35,139 2.4 5.4

Hansteen Holdings 14,010 1.0
McKay Securities 19,068 1.3
Capital & Regional 2,061 0.1
Financial Services 94,571 6.5 8.3
Brewin Dolphin Holdings 39,890 2.8
Charles Stanley Group 13,424 0.9
CMC Markets 5,921 0.4
International Personal Finance 20,588 1.4
Non-Standard Finance 14,748 1.0
Software & Computer Services 76,306 5.3 4.0
Computacenter 29,859 2.1
Microgen 2,689 0.2
RM 19,081 1.3
SDL 18,466 1.3
Servelec Group 6,211 0.4
Technology Hardware & Equipment 36,261 2.6 0.9
Laird 12,546 0.9
Spirent Communications 23,715 1.7
Investments as shown in the Balance Sheet 1,440,496 100.3 100.0
Net Liabilities (4,854) (0.3)
Total Net Assets 1,435,642 100.0 100.0
1
Listing suspended.
2
Unquoted security.
3
This reflects the rebalanced index as at 1 January 2018.
Summary of Material Investment Transactions

For the year ended 31 December 2017
Cost Proceeds
Purchases £’000 Sales £’000
Mitchells & Butlers 16,090 e2v technologies 36,729
Stagecoach Group 15,621 Paragon Banking Group 35,194
Non-Standard Finance 15,525 Games Workshop Group 26,602
Forterra 12,997 Ladbrokes Coral 22,106
Bovis Homes Group 11,007 Renewi 20,670
Essentra 10,933 John Laing Group 19,689
ei group 10,009 Hilton Food Group 16,942
Dunelm Group 9,942 Microgen 16,832
Restaurant Group 9,469 Novae Group 14,958
Servelec Group 9,382 NCC Group 14,117
SIG 9,065 Hansteen Holdings 13,716
Bakkavor Group 8,528 Punch Taverns 12,742
U and I Group 8,450 Centamin 12,722
NCC Group 8,242 Mothercare 12,565
KCOM Group 8,104 Imagination Technologies Group 10,333
Topps Tiles 7,871 SDL 9,150
Just Group 6,974 Findel 8,201
Spirent Communications 6,655 Countrywide 6,267
Ultra Electronics Holdings 6,317 Servelec Group 5,752
DFS Furniture 6,074 Vitec Group 3,911
Other Purchases 103,674 Other Sales 24,207
Total Purchases (incl. transaction costs) 300,929 Total Sale Proceeds (incl. transaction costs) 343,405

Portfolio Information
FTSE Industry Classification Exposure Analysis
Net Net
NSCI (XIC) Portfolio Portfolio Purchases/ Appreciation/ Portfolio Portfolio NSCI (XIC)2
Weight Weight Valuation (Sales)1 (Depreciation) Valuation Weight Weight
Sector % % £’000 £’000 £’000 £’000 % %
Oil & Gas 4 6 77,836 9,597 (20,462) 66,971 5 4
Basic Materials 4 3 40,218 (9,427) 134 30,925 2 4
Industrials 26 38 467,191 (15,437) 114,394 566,148 39 26
Consumer Goods 10 5 56,661 (17,303) 33,770 73,128 5 10
Health Care 5 1 18,163 412 (2,570) 16,005 1 4
Consumer Services 19 20 249,619 42,345 20,898 312,862 22 19
Telecommunications 1 – 876 8,104 (17) 8,963 1 2
Utilities – – – – – – – 1
Financials 25 20 249,361 (38,284) 41,850 252,927 17 25
Technology 6 7 93,322 (22,483) 41,728 112,567 8 5
100 100 1,253,247 (42,476) 229,725 1,440,496 100 100
FTSE Index Classification Exposure Analysis

NSCI NSCI
Portfolio (XIC) Portfolio (XIC)2
No. of Valuation Weight Weight No. of Valuation Weight Weight
Index Classification Companies £’000 % % Companies £’000 % %
FTSE 100 – – – – – – – –
FTSE 250 26 507,359 41 62 23 540,054 38 60
FTSE SmallCap 37 501,013 40 29 41 660,501 46 31
FTSE Fledgling 7 40,590 3 1 7 49,783 3 1
Other 17 204,285 16 8 15 190,158 13 8
87 1,253,247 100 100 86 1,440,496 100 100
1 Includes transaction costs. 2 This reflects the rebalanced index as at 1 January 2018.
Other Information
Company Status
The Company is a closed-ended investment trust listed on the London Stock Exchange and an Alternative
Investment Fund under the Alternative Investment Fund Managers (AIFM) Directive. The Company has been
approved by HM Revenue & Customs as an investment trust for accounting periods commencing on or after
1 January 2013 subject to the Company continuing to meet the eligibility conditions. The Company will continue to
conduct its affairs as an investment trust. Furthermore, the Company is an investment company as defined within
the meaning of Section 833 of the Companies Act 2006.
Board Diversity
The Board recognises the importance of diversity in its broadest sense (including skills, experience, gender and tenure)
in enabling it to fulfil the present and future needs of the Company. As at 31 December 2017, there were three male
directors and two female directors.
Environmental, Human Rights, Employee, Social Community Issues

The requirement to detail information about environmental matters, human rights, social and community issues does
not apply to the Company as it has no employees; all Directors are non-executive and it has outsourced its functions to
third party service providers. The Company’s and the Managers’ approach to social, environmental and ethical issues is
set out within the Corporate Governance Report on page 26.
The Strategic Report, contained on pages 1 to 17, has been approved by the Board of Directors on 26 January 2018 and signed
on its behalf by:
Paul Trickett,
Chairman

Governance Report
Board of Directors
Paul Trickett, Chairman
Appointed: 30 January 2013
Shareholding in the Company: 6,860 Ordinary Shares
Paul is a non executive director on a number of companies. As well as chairing Aberforth Smaller Companies Trust, he
also chairs Railpen Investments and sits on the Board of Aviva Life UK and Thomas Miller Holdings. He also chairs the
Advisory Board of Muse Advisory and is Trustee of the Mineworkers Pension Scheme. He retired from a full time
executive career in 2013 where he was latterly a Managing Director at Goldman Sachs Asset Management.
Julia Le Blan
Appointed: 29 January 2014 and is a member of the Audit Committee
Julia is a chartered accountant and has worked in the financial services industry for over 30 years. She was formerly a tax
partner at Deloitte and expert on the taxation of investment trust companies. She sat for two terms on the AIC’s
technical committee and is also a director of The Biotech Growth Trust plc, F&C UK High Income Trust plc, Impax
Environmental Markets plc and JP Morgan US Smaller Companies Investment Trust plc.
Paula Hay-Plumb
Appointed: 29 January 2014
Paula is a chartered accountant and an experienced director with a wealth of finance and governance expertise in both
the private and public sectors. Her previous roles include Corporate Finance and Group Reporting Director at Marks and
Spencer plc, Chairman of the National Australia Group Common Investment Fund and non-executive board member of
Skipton Building Society and the National Audit Office. Paula is currently a non-executive board member of The Crown
Estate, Hyde Housing Association and Oxford University Hospitals NHS Foundation Trust and a Trustee of Calthorpe
Estates.
David Jeffcoat
Appointed: 22 July 2009 and is Chairman of the Audit Committee
David began his career as a production engineer at Jaguar Cars. After qualifying as an accountant (FCMA) several years
later, he held a number of senior positions including subsidiary-level Finance Director at GlaxoWellcome plc and Group
Financial Controller at Smiths Industries plc. More recently he was Group Finance Director and Company Secretary at
Ultra Electronics Holdings plc from 2000 until 2009. He is a Director and Chairman of the Audit Committee of WYG plc.
He also works as a volunteer Citizens Adviser.
Richard Rae
Appointed: 26 January 2012 and is a member of the Audit Committee
Richard qualified as a chartered accountant with KPMG and joined Hoare Govett as an investment analyst in 1987. He
spent 22 years working in investment research and equities management, latterly as a Managing Director, responsible
for smaller companies, in the Global Equities division of ABN AMRO. Since 2009, he has established himself as an
independent management consultant providing corporate advice to both listed and unlisted companies. He is also a
director of Maistro plc and Chaarat Gold Holdings Limited.
18 Governance Report Aberforth Smaller Companies Trust plc

Directors’ Report
The Directors submit their Annual Report and Financial Statements for the year ended 31 December 2017.
Directors
The Directors of the Company during the financial year are listed on page 31. Further information about the Board can
be found in the Corporate Governance Report, which forms part of this Directors’ Report.
It is the responsibility of the Board to ensure that there is effective stewardship of the Company’s affairs. In common
with the majority of investment trusts, the Company has neither executive directors nor any employees. However, the
Board has engaged external firms to undertake the investment management, secretarial, depositary and custodial
activities of the Company.
Objective, Investment Policy, Investment Strategy, Dividend Policy and Risks

These are explained fully in the Strategic Report on pages 1, 4 and 5.
Return and Dividends

The total return attributable to shareholders for the year ended 31 December 2017 amounted to a gain of £262,347,000
(2016: gain of £62,352,000). The net asset value per Ordinary Share at 31 December 2017 was 1,543.72p (2016:
1,292.57p).
Your Board is pleased to declare a final dividend of 19.75p and a special dividend of 6.70p (total of £24,598,000), which
produces total dividends for the year of 35.5p (total of £33,098,000). The final and special dividends, subject to
Shareholder approval, will be paid on 6 March 2018 to Shareholders on the register at the close of business on 9 February
2018.
Investment Managers
Aberforth Partners LLP (the firm, Managers or Aberforth) act as Alternative Investment Fund Manager and Secretaries
to the Company. The business was established in 1990 to provide institutional and wholesale investors with a high level
of resources focused exclusively on small UK quoted companies. Since then funds under management have grown to
£2.5 billion (as at 31 December 2017). The firm is wholly owned by seven partners, six of whom are investment
managers. The investment managers work as a team managing the Company’s portfolio on a collegiate basis.
These services can be terminated by either party at any time by giving six months’ notice of termination. Compensation
would be payable in respect of this six month period only if termination were to occur sooner. Aberforth receives an
annual management fee, payable quarterly in advance, equal to 0.75% of the net assets up to £1 billion, and 0.65%
thereafter. The management fee amounted to £9,641,000 in the year ended 31 December 2017 (2016: £8,296,000).
The secretarial fee amounted to £81,692 (excluding VAT) during 2017 (2016: £79,940, excluding VAT). It is adjusted
annually in line with the Retail Prices Index and is subject to VAT, which is currently irrecoverable by the Company.
The Board reviews the Company’s investment management and secretarial arrangements on an on-going basis and
formally at its October meeting, where each Director completes a Managers’ Evaluation questionnaire. The Board then
considers the results of the questionnaire and discusses the following matters, amongst others, in its review:
• investment performance in relation to the investment objective, policy and strategy;
• the continuity and quality of personnel managing the assets;
• the level of the management fee;
• the quality of reporting to the Board;
• the alignment of interests between the Managers and the Company’s shareholders;
• the administrative services provided by the Secretaries; and
• the level of satisfaction of major shareholders with the Managers.
Following the most recent review, the Board was of the opinion that the continued appointment of Aberforth as
investment managers, on the terms agreed, remains in the best interests of shareholders.
Governance Report Aberforth Smaller Companies Trust plc 19

Directors’ Report
Depositary
National Westminster Bank plc carry out the duties of Depositary as specified in the Alternative Investment Fund
Managers (AIFM) Directive in relation to the Company, including:
• holding or controlling all assets of the Company that are entrusted to it for safekeeping;
• cash monitoring and verifying the Company’s cash flows; and
• oversight of the Company and the Managers.
In carrying out such duties, the Depositary acts in the best interests of the shareholders of the Company. The Depositary
is contractually liable to the Company for the loss of any securities entrusted to it. The Depositary is also liable to the
Company for all other losses suffered as a result of the Depositary’s fraud, negligence and/or failure to fulfil its duties
properly.
National Westminster Bank plc receives an annual fee, payable quarterly in arrears, of 0.0085% of the net assets of the
Company and their appointment may be terminated at any time by giving at least six months’ notice. A Depositary may
only be removed from office when a new Depositary is appointed by the Company.
Capital Structure and Share Buy-Backs

At 31 December 2017, the Company’s authorised share capital consisted of 333,299,254 Ordinary Shares of 1p of which
92,999,137 were issued and fully paid. During the year, 1,404,155 shares (1.5% of the Company’s issued share capital
with a nominal value of £14,042) were bought back and cancelled at a total cost of £18,142,000. No shares are held in
treasury. Share buy-ins may succeed in narrowing the discount between the Company’s share price and net asset value
per share (NAV) or in limiting its volatility, but their influence is inevitably subject to broader stockmarket conditions.
Irrespective of their effect on the discount, buy-ins at the margin provide an increase in liquidity for those Shareholders
seeking to crystallise their investment and at the same time deliver an economic uplift for those Shareholders wishing to
remain invested in the Company. Accordingly, it is the intention to continue to use the share purchase facility within
guidelines established from time to time by the Board.
Continuation of the Company

The Company has no fixed duration. However, in accordance with the Company’s Articles of Association, shareholders
are asked every three years to vote on the continuation of the Company and an ordinary resolution will be proposed at
the Annual General Meeting to be held in March 2020.
If such resolution is not passed, the Directors will prepare and submit to shareholders (for approval by special resolution)
proposals for the unitisation or appropriate reconstruction of the Company. In putting forward such proposals the
Directors will seek, inter alia, to provide shareholders with a means whereby they can defer any liability to capital gains
tax on their investment at that time. If such proposals are not approved, shareholders will, within 180 days of the
relevant Annual General Meeting, have the opportunity of passing an ordinary resolution requiring the Company to be
wound up. On a winding up, after meeting the liabilities of the Company, the surplus assets will be paid to the holders
of Ordinary Shares and distributed, pro rata, among such holders.
Going Concern
In accordance with the report “Guidance on Risk Management, Internal Control and Related Financial and Business
Reporting” issued by the Financial Reporting Council, the Audit Committee has undertaken and documented an
assessment of whether the Company is a going concern. The Committee then reported the results of its assessment to
the Board.
The Company’s business activities, capital structure and borrowing facility, together with the factors likely to affect its
development and performance are set out in the Strategic Report. In addition, the Annual Report includes the Company’s
objectives, policies and processes for managing its capital, its financial risk, details of its financial instruments and its
exposures to credit risk and liquidity risk. The Company’s assets comprise mainly readily realisable equity securities,
which, if necessary, can be sold to meet any funding requirements, though funding flexibility can typically be achieved
through the use of the bank debt facility. The Company has adequate financial resources to enable it to meet its day-to-
day working capital requirements.
In summary and taking into consideration all available information, the Directors have concluded it is appropriate to
continue to prepare the financial statements on a going concern basis.
Voting Rights of Shareholders

At shareholder meetings and on a show of hands, every shareholder present in person or by proxy has one vote. On a
poll, every shareholder present in person has one vote for each share he/she holds and a proxy has one vote for every
share in respect of which he/she is appointed.

Directors’ Report
The Board is pleased to offer electronic proxy voting, including CREST voting capabilities. Further details can be found in
the Notice of the AGM.
Notifiable Share Interests

The Board has received notifications of the following interests in the voting rights of the Company as at 31 December
2017 and 26 January 2018. The total number of votes amounted to 92,999,137 at 31 December 2017. Since 31 December
2017, 67,000 shares have been bought back and cancelled and therefore the total number of votes at 26 January 2018
amounted to 92,932,137.
Notified interests Percentage
of Voting
Rights Held
Investec Wealth & Investment Limited 8.5%
Brewin Dolphin Limited 8.4%
Rathbone Brothers plc 5.6%
Annual General Meeting

The AGM will be held on Thursday, 1 March 2018 at 6.00 p.m. at 14 Melville Street, Edinburgh EH3 7NS. The following
special resolution will be proposed at the AGM.
Purchase of Own Shares
The current authority of the Company to make market purchases of up to 14.99% of the issued Ordinary Shares of the
Company expires at the end of the AGM. Resolution 10, as set out in the Notice of the AGM, seeks renewal of such
authority until the AGM in 2019. The price paid for shares will not be less than the nominal value of 1p per share and the
maximum price shall be the higher of (i) 105% of the average of the middle market quotations for the shares for the five
business days immediately preceding the date of purchase and (ii) the higher of the price of the last independent trade
and the highest current independent bid on the trading venue where the purchase is carried out. Any shares purchased
under the authority will be automatically cancelled, rather than being held in treasury, thereby reducing the Company’s
issued share capital. There are no outstanding options or warrants to subscribe for equity shares in the capital of the
Company.
Directors’ Recommendation
The Directors consider each resolution being proposed at the AGM, to be in the best interests of shareholders as a whole
and they unanimously recommend that all shareholders vote in favour of them, as they intend to do so in respect of their
own beneficial shareholdings.
Additional information in respect of the Companies Act 2006

The following information is disclosed in accordance with Section 992 of the Companies Act 2006.
• The Company’s capital structure and voting rights are summarised on pages 20 and 21.
• Details of the substantial shareholders in the Company are listed above.
• The rules concerning the appointment and replacement of Directors are contained in the Company’s Articles of
Association and are discussed on pages 23 and 24.
• Amendment of the Company’s Articles of Association and powers to issue shares on a non pre-emptive basis or buy
back the Company’s shares requires a special resolution to be passed by shareholders.
• There are no restrictions concerning the transfer of securities in the Company; no special rights with regard to
control attached to securities; no agreements between holders of securities regarding their transfer known to the
Company; no agreements to which the Company is party that might affect its control following a takeover bid.
• There are no agreements between the Company and its Directors concerning compensation for loss of office.
Greenhouse Gas Emissions

As the Board has engaged external firms to undertake the investment management, secretarial and custodial activities
of the Company, the Company has no greenhouse gas emissions to report from its operations, nor does it have
responsibility for any other emissions-producing sources under the Companies Act 2006 (Strategic Report and Directors’
Reports) Regulations 2013.

Directors’ Report
Bribery Act 2010
The Company has zero tolerance of bribery and is committed to carrying out business fairly, honestly and openly.
Aberforth Partners, the Company’s Investment Managers, have confirmed that anti-bribery policies and procedures are
in place and have a zero tolerance towards bribery.
Post Balance Sheet Events

As stated above, since 31 December 2017, the Company bought in and subsequently cancelled 67,000 shares at a total
cost of £912,000.
Independent Auditor
Deloitte LLP has expressed its willingness to continue in office as auditor and a resolution proposing their re-appointment
will be put to the forthcoming Annual General Meeting.
Disclosure of Information to Auditor

The Directors who held office at the date of approval of this Directors’ Report confirm that, so far as they are each aware,
there is no relevant audit information of which the Company’s Auditor is unaware; and each Director has taken all 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.
Future Developments
The future success of the Company is dependent primarily on the performance of its investments. Although the Company
invests in companies that are listed or quoted in the United Kingdom, the underlying businesses of those companies are
affected by various economic factors, many of an international nature. The Board’s intention is that the Company will
continue to pursue its investment objective and the stated investment strategy and policy.
By Order of the Board

Paul Trickett
Chairman
26 January 2018

Corporate Governance Report
Introduction
The Board is committed to maintaining and demonstrating high standards of corporate governance. The Board has
considered the principles and recommendations of the 2016 AIC Code of Corporate Governance (the AIC Code) as set
out in the AIC Guide. The AIC Code addresses all the principles set out in the UK Corporate Governance Code, as well as
setting out additional principles and recommendations on issues that are of specific relevance to investment trusts. The
Board considers that reporting in accordance with the principles and recommendations of the AIC Code provides more
relevant and comprehensive information to shareholders. Both the AIC Code and the AIC Guide are available on the AIC
website at www.theaic.co.uk. This report forms part of the Directors’ Report on pages 19 to 22.
Compliance
Throughout the year ended 31 December 2017 the Company complied with the recommendations of the AIC Code
except, as explained below, where the Company does not believe it appropriate to comply.
The Board, being small in size and composed entirely of independent non-executive Directors, has not appointed a
Remuneration or a Nomination Committee. Directors’ fees and the appointment of new Directors are considered by the
Board as a whole. The Board has also decided not to nominate a Deputy Chairman or a Senior Independent Director,
although the Chairman of the Audit Committee fulfils this role when necessary, for example in taking the lead in the
annual evaluation of the Chairman.
The UK Corporate Governance Code includes provisions relating to the role of the chief executive, executive Directors’
remuneration and the need for an internal audit function. For reasons set out in the AIC Guide, the Board considers these
provisions are not relevant to the Company as it is an externally managed investment company. In particular, all of the
Company’s day-to-day management and administrative functions are outsourced to third parties. As a result, the
Company has no executive Directors, employees or internal operations. The Company has therefore not reported further
in respect of these provisions.
The Board
The Board is responsible for the effective stewardship of the Company’s affairs. Strategic issues and all operational
matters of a material nature are considered at its meetings. The Board comprises five non-executive Directors, of whom
Mr Trickett is Chairman. A formal schedule of matters reserved for decision by the Board has been adopted. The Board
has engaged external firms to provide investment management, secretarial, depositary and custodial services.
Contractual arrangements are in place between the Company and these firms.
The Board carefully considers the various guidelines for determining the independence of non-executive Directors, placing
particular weight on the view that independence is evidenced by an individual being independent of mind, character and
judgement. An individual can therefore be considered to be independent even though their length of service may exceed
nine years. No limit on the overall length of service of any of the Directors, including the Chairman, has therefore been
imposed. All Directors are presently considered to be independent. All Directors retire at the AGM each year and, if
appropriate, seek re-election. Each Director has signed a letter of appointment to formalise the terms of their engagement
as a non-executive Director, copies of which are available on request and available at the AGM.
Meetings
The Board meets at least quarterly to review the overall business of the Company and to consider the matters specifically
reserved for it. Detailed information is provided by the Managers and Secretaries for these meetings and additionally at
regular intervals to enable the Directors to monitor compliance with the investment objective and the Company’s
investment performance compared with its benchmark index. The Directors also review several important areas
including:
• the stockmarket environment;
• the Company’s investment activity over the quarter relative to its investment policy;
• performance in relation to comparable investment and unit trusts;
• the revenue account, balance sheet and gearing position;
• share price discount (both absolute levels and volatility);
• shareholder register (including significant changes);
• regulatory matters; and
• relevant industry issues.
The Board also holds an annual strategy session to consider, amongst other matters, the Company’s objective and
investment strategy.

Annual Plan
The following highlights various additional matters considered by the Board during the past year:
January April July October
Consider Final Approval of the Shareholder Consider Interim Approval of Half Internal Control Corporate
Dividend Annual Report Communication Dividend Yearly Report Review Governance Review
including the
Managers’ policy
on stewardship
Review of Continuation Review of Annual Strategy
Gearing Vote significant Review Review Managers’ Board &
interests continued Committee
appointment and Evaluation
remuneration
Renewal of the Detailed review
Debt Facility of Investment Board Review of
Trust Peer Group Composition Directors’ Fees
The following table sets out the Directors of the Company during the financial year, together with the number of Board
and Committee meetings held and the number of meetings attended by each Director (whilst a Director or Committee
member). All Directors also attended the AGM in March 2017.
Audit
The Board Committee
Director Eligible to attend Attended Eligible to attend Attended
S P Trickett, Chairman 5 5 – –
P M Hay-Plumb 5 5 – –
D J Jeffcoat 5 5 3 3
J Le Blan 5 5 3 3
R A Rae 5 5 3 3
Appointments to the Board

The Board regularly reviews its composition, having regard to the Board’s structure and to the present and future needs of
the Company. The Board takes into account its diversity, the balance of expertise and skills brought by individual Directors,
and length of service, where continuity and experience can add significantly to the strength of the Board. The Board has not
yet set diversity targets or a formal policy. No directors were appointed during 2017. However, as mentioned in the
Chairman’s Statement, David Jeffcoat will retire at the conclusion of this year’s AGM and the Board has decided that an
additional Director should be appointed in due course.
The Board established a Committee, chaired by Paul Trickett, for this purpose taking into consideration the Board’s agreed
requirements. External executive search consultants, Forster Chase, were appointed to conduct a full search in order to find
the best person for the position. Several strong candidates were identified and the Committee, supported by Forster Chase,
held conference calls and meetings with a shortlist of candidates. The remaining Directors recently met the preferred
candidates put forward by the Committee and it is likely that an announcement regarding Board composition will be made
in the coming weeks.
Board performance and re-appointment of Directors

The Board undertakes a formal annual assessment of its collective performance on a range of issues including the Board’s
role, processes and interaction with the Managers. The Board conducted this review of the Board and the Audit Committee
by way of an evaluation questionnaire, the results of which were summarised and discussed in October 2017, providing
valuable feedback for improving Board effectiveness and highlighting areas for further development. The appraisal of the
Chairman was led by the Chairman of the Audit Committee. In 2016, the Board appointed Lintstock Limited to facilitate an
external review and its was agreed to utilise external facilitators every three years.
In line with the Board’s policy, all Directors, with the exception of David Jeffcoat, being eligible, offer themselves for re-
election at the forthcoming AGM. The Board believes that each Director continues to be effective, bringing a wealth of
knowledge and experience to the Board, and the Chairman recommends their re-election to Shareholders. As mentioned
above, David Jeffcoat will retire at the conclusion of this year’s AGM.

Directors’ and Officers’ Liability Insurance
The Company maintains appropriate insurance cover in respect of legal action against its Directors. The Company has
also entered into qualifying third party deeds of indemnity with each Director to cover any liabilities that may arise to a
third party, other than the Company, for negligence, default or breach of trust or duty. The deeds were in force during
the year to 31 December 2017 and up to the date of approval of this report. The Directors are not indemnified in respect
of liabilities to the Company or costs incurred in connection with criminal proceedings in which the Director is convicted
or required to pay any regulatory or criminal fines.
Training and Advice

New Directors are provided with an induction programme that is tailored to the particular requirements of the
appointee. Thereafter regular briefings are provided on changes in regulatory requirements that affect the Company.
Directors are also encouraged to attend industry and other seminars. Directors, in the furtherance of their duties, may
also seek independent professional advice at the expense of the Company. No Director took such advice during the
financial year under review.
All Directors have access to the advice and services of the Company’s Secretaries, Aberforth Partners LLP, who are
responsible to the Board for ensuring that Board procedures are followed and that applicable rules and regulations are
complied with. The Company Secretaries are also responsible for advising the Board through the Chairman on all
governance matters.
Conflicts of Interest
Company directors have a statutory obligation to avoid a situation in which they (and connected persons) have, or can have,
a direct or indirect interest that conflicts, or may possibly conflict, with the interests of the Company. The Board has in place
procedures for managing any actual or potential conflicts of interest. No conflicts of interest arose during the year under
review.
Risk Management and Internal Control

The Board has overall responsibility for the Company’s risk management and internal control systems and for reviewing
their effectiveness. The Company applies the guidance published by the Financial Reporting Council on internal controls.
Internal control systems are designed to manage, rather than eliminate, the risk of failure to achieve the business objective
and can provide only reasonable and not absolute assurance against material misstatement or loss. These controls aim to
ensure that the assets of the Company are safeguarded, that proper accounting records are maintained and that the
Company’s financial information is reliable. The Directors have a robust process for identifying, evaluating and managing
the significant risks faced by the Company, which are recorded in a risk matrix. The Board considers each risk as well as
reviewing the mitigating controls in place. Each risk is rated for its “likelihood” and “impact” and the resultant numerical
rating determines its ranking into High, Medium or Low Risk. This process was in operation during the year and continues
in place up to the date of this report. It principally involves the Audit Committee receiving and examining regular reports
from key service providers. The Board then receives a detailed report from the Audit Committee on its findings. As a
consequence the Directors have not identified any significant failures or weaknesses in respect of the Company’s internal
control systems.
Relations with Shareholders

The Board places great importance on communication with shareholders. Directors of the Company are available to meet
with any shareholder on request. The Managers meet the larger shareholders twice a year to provide them with a detailed
report on the progress of the Company and to receive feedback from shareholders. The Board receives reports from the
Managers of these shareholder meetings. Furthermore, following publication of the Annual Report, the Chairman emails
the largest shareholders inviting questions on all aspects concerning the Company. The Directors may be contacted via the
Secretaries whose details are shown on the back cover or through the Chairman’s email address,
paul.trickett@aberforth.co.uk. During the year, the Chairman met with several large shareholders to discuss a range of
topics and provided feedback to the Board.
All shareholders have the opportunity to attend and vote at the AGM where the Directors and Managers are available to
discuss important issues affecting the Company. Proxy voting figures are announced at the AGM and are available via the
Managers’ website shortly thereafter. In addition to the annual and half yearly reports, the Company’s performance, daily
Net Asset Values, monthly factsheets and other relevant information is published at www.aberforth.co.uk.

Socially Responsible Investment
The Directors, through the Managers, encourage investee companies to adhere to best practice in the area of Corporate
Governance and Socially Responsible Investment (SRI). The Managers believe that sound social, environmental and
ethical policies make good business sense and take these issues into account when investment decisions are taken.
However, the Managers do not exclude companies from their investment universe purely on grounds of social,
environmental and ethical concerns. Instead, the Managers adopt a positive approach whereby such matters are
discussed with management with the aim of improving procedures and attitudes.
UK Stewardship Code
The Board and the Managers support the UK Stewardship Code, issued by the FRC in September 2012, which sets out
the principles of effective stewardship by institutional investors. The Company’s investment portfolio is managed by
Aberforth Partners LLP who invest exclusively in small UK quoted companies and, as a significant investor within this
asset class, the Managers have a strong commitment to effective stewardship.
The Board has reviewed, and endorses, the Managers’ Stewardship Policy, which is available within the literature library
section of the Managers’ website, at www.aberforth.co.uk.
Voting Policy
The Board has given discretionary voting powers to the Managers to exercise the voting rights on every resolution that is
put to shareholders of the companies in which the Company is invested. The Managers vote against resolutions that they
believe may damage shareholders’ rights or economic interests and under normal circumstances these concerns would
have been raised with directors of the company concerned. The Board receives quarterly reports from the Managers on
governance issues (including voting) pertaining to investee companies.

Paul Trickett
Chairman
26 January 2018

Audit Committee Report
The Committee members are all independent non-executive directors who have been selected by the Board to fulfil
the Committee’s duties based upon their range of financial and commercial expertise. They are David Jeffcoat
(Chairman), Richard Rae and Julia Le Blan. The members’ biographies can be found on page 18.
Key Objective:
The objective of the Committee is to provide assurance to the Board as to the effectiveness of the Company’s internal
controls and the integrity of its financial records and externally published results. In doing so the Committee operates
within terms of reference that have been agreed by the Board. These are reviewed annually and are available upon
request. They will also be available for inspection at the AGM.
Principal Responsibilities:
The Committee has been given the following responsibilities:
• ensuring that all of the Company’s principal risks are identified;
• monitoring the mitigating controls that have been established;
• monitoring compliance with the relevant statutory, regulatory and taxation requirements for a UK based
investment trust which is listed on the London Stock Exchange;
• reviewing the Company’s financial statements, the accounting policies adopted and the main judgemental areas;
• ensuring that the Annual Report, taken as a whole, is fair, balanced and understandable;
• agreeing the external Auditor’s terms of appointment, determining the independence and objectivity of the
Auditor and assessing the effectiveness of the audit; and
• considering whether it is appropriate for certain non-audit services to be carried out by the Auditor.
The Chairman reports formally to the Board on the Committee’s proceedings after each meeting. To assist with the
various duties of the Committee, a meeting Plan has been adopted which is reviewed annually. This is the latest
version:
Audit Committee Annual Plan
January April July October
Annual Report Key Risks of the Meetings to be Half Yearly Report Key Risks of the Corporate Key Risks of the
including judgemental Company called if required including Company Governance Company
areas, going concern, judgemental areas, Compliance
viability statement, expense analysis and
letter of Provision of non- Half Yearly Report Investment Trust Investment Trust
representation, audit services, announcement Status Self evaluation of Status
expense analysis and including taxation the Committee
Annual Report compliance services
announcement
Basis of Committee’s Audit Plan Internal Controls
Management Fee Terms of Reference Review including
Custodian’s Audit meeting/ allocation (every reports from the
Controls Report evaluation of the three years) Auditor Plan, Managers and other
update audit including together with the third parties
auditor Terms of
independence Audit Fees Engagement
Investment Trust
Status Depositary Report
Cyber Security
Measures (Aberforth
Partners)
Meetings
Typically three meetings are held each year. Representatives of Aberforth Partners LLP, who provide the Company with
secretarial services, attend all of the meetings. Deloitte LLP (“Deloitte”), the external auditor, attended the meetings in
January and October.
During the last twelve months the Committee has focused on the areas described below.

Financial Reporting
The half yearly financial results, published on 27 July 2017, were not audited. Therefore the Committee’s business in July
was focused on a discussion, with supporting documentation from the Secretaries, on the preparation and content of
the Half Yearly Report, together with other aspects such as going concern.
In October 2017, the Committee received a letter from the Financial Reporting Council (FRC) regarding their review of
the 2016 Annual Report. The FRC had no formal points or concerns on the 2016 Annual Report.
In January 2018, the Committee received a report and supporting presentation from the external Auditor on its audit of
the financial statements for the year to 31 December 2017. This included details of the steps it had taken to confirm the
valuation and ownership of the investment portfolio and recognition of income. Their report also focused on Alternative
Performance Measures and the appropriate disclosures. In addition, the Secretaries reported on the preparation of the
financial results and other relevant matters. The Committee considered these reports in detail and took further comfort
from the internal control review discussed below. The Chairman of the Committee had previously discussed the outcome
of the audit process and the Annual Report with the audit partner without representatives of Aberforth Partners being
present. Consequently, the Committee concluded that it was satisfied as to:
• the ownership and valuation of the investment portfolio as at 31 December 2017; and
• revenue recognition including dividend completeness and the accounting treatment of each special dividend
recognised during the period.
The Committee read and discussed this Annual Report and concluded that it is fair, balanced and understandable. It
provides the information necessary for shareholders to assess the Company’s performance, objective and strategy.
As a result the Committee agreed that it would recommend to the Board that the financial statements be approved for
publication.
Going Concern and Viability

The Committee received reports on going concern from the Secretaries in July and January, reflecting the guidance
published by the Financial Reporting Council. The content of the investment portfolio, trading activity, portfolio
diversification and the existing debt facility were also discussed. After due consideration, the Committee concluded it
was appropriate to prepare the Company’s accounts on a going concern basis and made this recommendation to the
Board. The relatively high level of liquidity of the portfolio was the main factor that led to this conclusion.
The Committee also assessed the viability of the Company. The Committee agreed that it was appropriate to provide a
Viability Statement for a five year period for the reasons set out in the Statement on page 5. In January 2018, the
Committee conducted a series of stress tests that considered the impact of severe market downturn scenarios on
Shareholders’ funds, the debt facility, investment income and also the impact of losing investment trust status. The
outcome of this activity led the Committee to recommend the Viability Statement to the Board.
Internal Control and Risks

The Committee carefully considered a Matrix of the Company’s principal risks and the mitigating controls at each
meeting. In October the risks and controls were addressed in more detail. The Committee enhanced the content of the
Matrix during the year and believes that it continues to reflect accurately the Company’s principal risks. These risks,
which are detailed on page 5 of this Report, have not changed significantly during the year.
Also in October the Committee received the Managers’ report on internal controls, including the assurance report issued
by PricewaterhouseCoopers LLP (PwC) on the nature and effectiveness of the control framework that has been
established by the Managers. A representative of PwC attended the meeting. In addition, the Committee received
internal control reports from the custodian Northern Trust and Capita Registrars (now Link Registrars). The Committee
reviewed these reports and concluded that there were no significant control weaknesses or other issues that needed to
be brought to the Board’s attention.
The Committee continues to monitor closely the increasing risk arising from cyber threats, notwithstanding that the
Company outsources all of its activities to external parties. In October 2017, the Committee received presentations from
Aberforth Partners and their external service provider for cyber security, covering the measures that are in place to
protect the Managers’ systems and the Company information that they contain. The Committee noted the assurances that
have been given about the effectiveness of control measures. It concluded that, although cyber-attack represents an
increasing threat to companies and public bodies worldwide, the Company has taken all reasonable steps to ensure that
appropriate protection measures are in place. Nevertheless this particular threat will continue to be monitored closely.

The Committee also discussed whether there was a need for a dedicated internal audit function. It concluded that, as
the Company has no employees and sub-contracts all of its operations to third party suppliers, an internal audit function
is not necessary.
Investment Trust Status

It is essential for the Company to maintain its investment trust status. The Committee confirms this point at each
meeting with reference to a checklist prepared by the Secretaries. The position is also confirmed by the external auditor
as part of the audit process.
External Auditor
Deloitte was appointed as the Company’s auditor on 17 April 2013 following a formal tender process. This appointment
has been renewed at each subsequent AGM. Based upon existing legislation, another tender process would not be
required until 2023. The Company is therefore in compliance with the provisions of “The Statutory Audit Services for
Large Companies Market Investigation” (Mandatory use of competitive tender processes and audit committee
responsibilities) Order 2014 as issued by the Competition & Markets Authority.
Audit Planning and Audit Fees

The external audit partner from Deloitte presented the detailed audit plan to the Committee in October in advance of
the 2017 audit. The plan set out the scope of the audit, the principal risks that would be addressed (as detailed in the
Independent Auditor's Report), the timetable and the proposed fees. These amounted to £20,100, excluding VAT, for the
year (2016: £19,500). There were no non-audit activities carried out by Deloitte.
Evaluation of the Auditor

Following the completion of the audit in January 2018, the Committee reviewed the Auditor’s effectiveness. The
Committee acknowledged that the audit team comprised staff with appropriate levels of knowledge and experience and
that Andrew Partridge, the audit partner, who has significant experience of the investment trust sector, had now served
for five reporting years. As the audit partner is required to be rotated every five years, the Committee has arranged to
meet the proposed new audit partner in March 2018. The Committee noted positive feedback from the Secretaries on
Deloitte's performance on the audit. Additionally Deloitte had provided confirmation that they have complied with the
relevant UK professional and regulatory requirements on independence.
Taking these factors into account, the Committee is satisfied that the external audit was carried out effectively. It has
therefore recommended the re-appointment of Deloitte as the Company's auditor for the 2018 financial year. The Board
has given its support and a proposal will be put to Shareholders at the forthcoming AGM.
Committee Evaluation
A formal internal review of the Committee’s effectiveness, using an evaluation questionnaire, was undertaken during the
year. The outcome was positive with no significant concerns expressed. In 2016, a formal external review was facilitated
by Lintstock Limited and it was agreed to utilise external facilitators every three years in future.
David Jeffcoat
Audit Committee Chairman
26 January 2018

Directors’ Remuneration Policy
This section provides details of the remuneration policy applying to the Directors of the Company. All Directors are non-
executive, appointed under the terms of letters of appointment and none has a service contract. The Board has prepared this
report in accordance with the requirements of the Companies Act 2006.
This policy was previously approved by Shareholders at the Annual General Meeting held in 2017. The policy provisions
continue to apply until they are next put to Shareholders for approval, which must be at intervals not exceeding three years.
This policy, together with the Directors’ letters of appointment may be inspected at the Company’s registered office.
The Board considers and determines all matters relating to the Directors’ remuneration at the beginning of each financial
period. A Remuneration Committee has not been formed as all of the Directors are non-executive and considered independent.
Company’s Policy on Directors’ Remuneration

The Company’s policy is that the remuneration of the Directors should be commensurate with the duties and responsibilities
of the role and consistent with the requirement to attract and retain Directors of appropriate quality and experience. No
Shareholder has expressed any views to the Company in respect of Directors’ remuneration. Remuneration Policy is not subject
to employee consultation as the Company has no employees. It is intended that this policy will remain in place for the following
financial year and subsequent periods.
The Board, at its discretion, shall determine Directors’ remuneration subject to the aggregate annual fees not exceeding
£200,000 in accordance with the Company’s Articles of Association. Such remuneration solely comprised Directors’ fees as set
out below and Directors are not eligible for any other remuneration.
The table below sets out the Directors’ fees in respect of the years ended 31 December 2017 and 31 December 2018. The
increase in fees, with the exception of the Chairman of the Audit Committee, is the first since 1 January 2014.
Annual Fees Annual Fees

2018 2017
£ £
Chairman of the Company 36,000 34,500

Director and Chairman of the Audit Committee 30,000 29,000
Director and Member of the Audit Committee 25,500 24,500
Director 24,000 23,000
Loss of Office
A Director may be removed without notice and no compensation will be due on loss of office.
Expenses
All directors are entitled to the reimbursement of expenses paid by them in order to perform their duties as a Director of the
Company.
Review of the Remuneration Policy

The Board has agreed to review the above policy at least annually to ensure that it remains appropriate.

Directors’ Remuneration Report
The Board has prepared this report in accordance with the requirements of the Companies Act 2006. The law requires the
Company’s Auditor to audit certain elements of this report. These elements are described below as “audited”. The Auditor’s
opinion is included in the Independent Auditor’s Report on page 34.
Directors’ Letters of Appointment

Each Director has entered into a letter of appointment with the Company for an initial period of service of three years, subject
to annual re-election by Shareholders. After the initial period, each Director’s term is, upon review, extended for a further year.
Directors are subject to election by Shareholders at the first Annual General Meeting after their appointment and thereafter
at every subsequent Annual General Meeting.
The following Directors held office during the year:
Date of Date of election/
Director Appointment re-election
S P Trickett, Chairman 30 January 2013 AGM 2018
P M Hay-Plumb 29 January 2014 AGM 2018
D J Jeffcoat 22 July 2009 N/A
J Le Blan 29 January 2014 AGM 2018
R A Rae 26 January 2012 AGM 2018
Each Director’s unexpired term is subject to their re-election at the Annual General Meeting in March 2018.
Directors’ Fees (Audited)

The emoluments of the Directors who served during the year were as follows:
Fees Fees
(Total Emoluments) (Total Emoluments)
2017 2016
Director £ £
S P Trickett, Chairman 34,500 34,500
D J Jeffcoat, Chairman of the Audit Committee 29,000 28,000
J Le Blan 24,500 24,500
P M Hay-Plumb 23,000 23,000
R A Rae 24,500 24,500
135,500 134,500
Directors are remunerated exclusively by fixed fees and do not receive bonuses, share options, pension contributions or other
benefits apart from the reimbursement of allowable expenses.
The following table shows the remuneration of the Directors in relation to distributions to Shareholders by way of dividends
and share buybacks:
Absolute
2017 2016 change
£’000 £’000 £’000
Total Directors’ remuneration 136 135 1
Total dividends in respect of that year 33,098 28,443 4,655
Total share buyback consideration 18,142 6,282 11,860

Directors’ Remuneration Report
Statement of Directors’ Shareholdings and Share Interests (Audited)
The Directors who held office at any time during the year ended 31 December 2017 and their interests in the Shares of the
Company as at that date and 1 January 2017 were as follows:
Ordinary Shares
Directors Nature of Interest 31 December 2017 1 January 2017
S P Trickett, Chairman Beneficial 6,860 6,860
J Le Blan Beneficial 3,000 3,000
D J Jeffcoat Beneficial 7,926 7,872
P M Hay-Plumb Beneficial 2,100 2,100
R A Rae Beneficial 4,000 4,000
There has been no change in the beneficial or non-beneficial holdings of the Directors between 31 December 2017 and
26 January 2018. The Company has no share options or share schemes. Directors are not required to own shares in the
Company.
Consideration of Shareholders’ Views and Statement of Voting

An ordinary resolution to approve the remuneration report is put to members at each Annual General Meeting. To date, no
Shareholders have commented in respect of the remuneration report or policy. At the last Annual General Meeting held on
1 March 2017, Shareholders, on a show of hands, passed the resolution to approve the Directors’ Remuneration Report: of the
42,650,973 proxy votes, 42,634,391 were cast in favour, 12,617 were cast against and 3,965 votes were withheld in respect of
the resolution to approve the Remuneration Report. Shareholders, on a show of hands, passed the resolution to approve the
Directors’ Remuneration Policy: of the proxy votes cast, 42,633,638 votes were cast in favour, 13,370 were cast against and
3,965 votes were withheld.
Share Price Performance
Total return performance since 31 December 2008
This graph compares the performance of
the Company’s share price with the Numis
400%
Smaller Companies Index (excluding

350%
300% Investment Companies), on a total return

basis (assuming all dividends reinvested)
since 31 December 2008. This index has
250%
been selected for the purposes of

200%
comparing the Company’s share price

performance as it has been the
150%
Company’s benchmark since inception.

100%
50%
0%
-50%
Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17
Share Price Benchmark
Note: For further informa on on the above graph, please refer to the Historic Total Returns tables on page 6.
Annual Statement
On behalf of the Board and in accordance with Part 2 of Schedule 8 of the Large and Medium-sized Companies and Groups
(Accounts and Reports) (Amendment) Regulations 2013, I confirm that the above Directors’ Remuneration Report summarises,
as appropriate, for the year ended 31 December 2017:
(a) the major decisions on Directors’ remuneration;
(b) any substantial changes relating to Directors’ remuneration made during the year; and
(c) the context in which those changes occurred and decisions were taken.
On behalf of the Board

Paul Trickett
Chairman
26 January 2018

Directors’ Responsibility Statement
The Directors are required by law to prepare financial statements for each financial year in accordance with applicable
law and regulations. The Directors are also required to prepare a Strategic Report, Directors’ Report, Directors’
Remuneration Report and Corporate Governance Statement.
The Directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted
Accounting Practice (Financial Reporting Standard 102 and applicable law). Under company law the Directors must not
approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the
Company and of the profit or loss of the Company for that period. In preparing these financial statements, the Directors
are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed
and explained in the financial statements; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume the Company will
continue in business.
The Directors are responsible for keeping accounting records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time the financial position of the Company, and that 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 Annual Report is published on www.aberforth.co.uk, which is the website maintained by the Company’s Managers.
The work undertaken by the Auditor does not involve consideration of the maintenance and integrity of the website and,
accordingly, the Auditor accepts no responsibility for any changes that may have occurred to the financial statements
since they were initially presented on the website. Legislation in the United Kingdom governing the preparation and
dissemination of the financial statements may differ from legislation in other jurisdictions.
Declaration
Each of the Directors confirms to the best of their knowledge that:
(a) the financial statements, which have been prepared in accordance with applicable accounting standards, give a
true and fair view of the assets, liabilities, financial position and profit or loss of the Company;
(b) the Strategic Report includes a fair review of the development and performance of the business and the position
of the Company, together with a description of the principal risks and uncertainties that it faces; and
(c) the Annual Report, taken as a whole, is fair, balanced and understandable and provides information necessary for
shareholders to assess the Company’s performance, business model and strategy.
On behalf of the Board

Paul Trickett
Chairman
26 January 2018

Independent Auditor’s Report
To the Members of Aberforth Smaller Companies Trust plc
Opinion
In our opinion the financial statements:
• give a true and fair view of the state of the Company’s affairs as at 31 December 2017 and of its return for the year then ended;
• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice, including Financial Reporting
Standard 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” and
• have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Aberforth Smaller Companies Trust plc (the ‘Company’) which comprise:
• the Income Statement;
• Reconciliation of Movements in Shareholders’ Funds;
• the Balance Sheet;
• the Cash Flow Statement; and
• the related notes 1 to 22.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United
Kingdom Generally Accepted Accounting Practice), including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of
Ireland”.
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 are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in
the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We confirm that the non-audit services prohibited by the FRC’s Ethical Standard were not provided to the
Company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Summary of our audit approach

Key audit matters The key audit matters that we identified in the current year were:
• Valuation and ownership of investments
• Revenue recognition - completeness of dividend income
».
Within this report, any key audit matters which are the same as the prior year are identified with O
The materiality that we used in the current year was £14.35m which was determined on the basis of
Materiality 1% of net assets at 31 December 2017.
Scoping Audit work to respond to the risks of material misstatement was performed directly by the audit
engagement team.
Significant changes in our approach There were no significant changes in our approach from the prior year.
Conclusions relating to principal risks, going concern and viability statement

We have reviewed the Directors’ statement regarding the appropriateness of the going We confirm that we have nothing
concern basis of accounting contained within note 1(a) to the financial statements and the material to add or draw attention to in
Directors’ statement on the longer-term viability of the Company contained within the respect of these matters.
strategic report on page 5.
We agreed with the Directors’ adoption
We are required to state whether we have anything material to add or draw attention to in of the going concern basis of accounting
relation to: and we did not identify any such material
• the disclosures on page 5 that describe the principal risks and explain how they are uncertainties. However, because not all
being managed or mitigated; future events or conditions can be
• the Directors' confirmation on page 5 that they have carried out a robust assessment predicted, this statement is not a
of the principal risks facing the Company, including those that would threaten its guarantee as to the Company’s ability to
business model, future performance, solvency or liquidity; continue as a going concern.
• the Directors’ statement on page 20 of the financial statements about whether they
considered it appropriate to adopt the going concern basis of accounting in preparing
them and their identification of any material uncertainties to the Company’s ability to
continue to do so over a period of at least twelve months from the date of approval of
the financial statements;

Conclusions relating to principal risks, going concern and viability statement (continued)
• the Directors’ explanation on page 5 as to how they have assessed the prospects of the
Company, over what period they have done so and why they consider that period to
be appropriate, and their statement as to whether they have a reasonable expectation
that the Company will be able to continue in operation and meet its liabilities as they
fall due over the period of their assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions; or
• whether the Directors’ statements relating to going concern and the prospects of the
Company required in accordance with Listing Rule 9.8.6R(3) are materially inconsistent
with our knowledge obtained in the audit.
Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements
of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we
identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit;
and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters.
Valuation and ownership of investments »

O
Key audit matter description How the scope of our audit responded to the Key observations
key audit matter
The listed investments of the Company We have performed the following procedures to No misstatements were
£1,440m (2016: £1,253m) make up 100.3% address this key audit matter: identified which required
(2016: 102.7%) of total net assets £1,436m • critically assessed the design and reporting to those charged with
(2016: £1,220m). Please see Accounting Policy implementation of the controls over governance in regards to the
1(b) and note 10. valuation and ownership of investments; valuation of the portfolio.
Investments listed on recognised exchanges • confirmed 100% of the valuation of the We did not identify any
are valued at the closing bid price at the year listed investments to closing bid prices differences when agreeing the
end. published by an independent pricing source; Company’s investment portfolio
There is a risk that investments may not be • confirmed 100% of listed investments at the to the confirmation received
valued correctly or may not represent the year end to confirmations received directly directly from the custodian and
property of the Company. Given the nature from the custodian and depository; and depositary.
and size of the balance and its importance to • reviewed the internal controls report over
the entity, we have considered that there is a Northern Trust, as it applied to custody and
potential risk of fraud in this area. attended the Audit Committee meeting at
The description of the key audit matter above which the Northern Trust controls report
should be read in conjunction with the was evaluated to assess the adequacy of the
significant issues considered by the Audit design and implementation of controls at
Committee discussed on page 28. the custodian.
Revenue recognition - completeness of dividend income »

O
Key audit matter description How the scope of our audit responded to the Key observations
key audit matter
Dividends from equity shares totalling £44m We have performed the following procedures to No misstatements were identified
(2016: £39m) are accounted for on an ex- address this key audit matter: which required reporting to those
dividend date as revenue, except where; in the • critically assessed the design and charged with governance in
opinion of the Board, the dividend is capital in implementation of controls over revenue regards to the completeness of
nature, in which case it is treated as a return of recognition including the Manager’s dividend income.
capital. Please see Accounting Policy 1(c) and monitoring of accuracy and completeness of Accounting policies in relation to
note 3. revenue; revenue recognition were found
There is a risk that revenue is incomplete and • for a sample of listed investments, obtained to be in line with FRS 102, the
consequently the revenue recognised in the ex-dividend dates and rates for dividends SORP and industry peers.
financial statements is misstated. declared during the year and agreed the
The description of the key audit matter above amounts recorded within the general ledger
should be read in conjunction with the to confirm that the recognition policy has
significant issues considered by the Audit been applied consistently; and
Committee discussed on page 28. • agreed a sample of dividend income receipts
to bank statements.
Financial Report Aberforth Smaller Companies Trust plc 35

Our application of materiality

We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a
reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our audit work and in
evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Materiality £14.35m (2016: £12.2m)
Significant changes in our approach 1% (2016: 1%) of net assets.
Rationale for the benchmark applied Net assets has been chosen as a benchmark as it is considered the most relevant benchmark for
investors and is the key driver of shareholder value.
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £287,000 (2016: £244,000), as
well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Audit Committee
on disclosure matters that we identified when assessing the overall presentation of the financial statements.
Other information
The Directors are responsible for the other information. The other information comprises the information included in We have nothing to
the Annual Report including the Strategic Report and the Directors’ Report, other than the financial statements and report in respect of
our auditor’s report thereon. these matters.
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.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine
whether there is a material misstatement in the financial statements or a material misstatement of the other
information. If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact.
In this context, matters that we are specifically required to report to you as uncorrected material misstatements of
the other information include where we conclude that:
• Fair, balanced and understandable – the statement given by the Directors that they consider the Annual Report
and financial statements taken as a whole is fair, balanced and understandable and provides the information
necessary for shareholders to assess the Company’s performance, business model and strategy, is materially
inconsistent with our knowledge obtained in the audit; or
• Audit Committee reporting – the section describing the work of the Audit Committee does not appropriately
address matters communicated by us to the Audit Committee; or
• Directors’ statement of compliance with the UK Corporate Governance Code – the parts of the Directors’
statement required under the Listing Rules relating to the Company’s compliance with the UK Corporate
Governance Code containing provisions specified for review by the auditor in accordance with Listing Rule
9.8.10R(2) do not properly disclose a departure from a relevant provision of the UK Corporate Governance Code.
Responsibilities of Directors
As explained more fully in the Directors’ Responsibility 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.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
36 Financial Report Aberforth Smaller Companies Trust plc

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.
Report on other legal and regulatory requirements

Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act
2006.
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are prepared
is consistent with the financial statements; and
• the Strategic Report and 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
any material misstatements in the Strategic Report or the Directors’ Report.
Matters on which we are required to report by exception

Adequacy of explanations received and accounting records We have nothing to
Under the Companies Act 2006 we are required to report to you if, in our opinion: report in respect of
these matters.
• we have not received all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the Company, or returns adequate for our audit have not
been received from branches not visited by us; or
• the Company’s financial statements are not in agreement with the accounting records and returns.
Directors’ remuneration We have nothing to
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of Directors’ report in respect of
remuneration have not been made or the part of the Directors’ Remuneration Report to be audited is not in these matters.
agreement with the accounting records and returns.
Other matters
Auditor tenure
Following the recommendation of the Audit Committee, we were appointed by the Board of Directors on 17 April 2013 to audit the financial
statements for the year ending 31 December 2013 and subsequent financial periods. The period of total uninterrupted engagement including
previous renewals and reappointments of the firm is 5 years, covering the years ending 31 December 2013 to 31 December 2017.
Consistency of the audit report with the additional report to the Audit Committee
Our audit opinion is consistent with the additional report to the Audit Committee we are required to provide in accordance with ISAs (UK).
Andrew Partridge (Senior Statutory Auditor)

for and on behalf of Deloitte LLP
Chartered Accountants and Statutory Auditor,
Edinburgh, United Kingdom
26 January 2018
(a) The maintenance and integrity of the Aberforth Partners LLP web site is the responsibility of the partners of Aberforth Partners LLP; the work carried out by the auditor of
Aberforth Smaller Companies Trust plc does not involve consideration of these matters and, accordingly, the auditor accept no responsibility for any changes that may have
occurred to the financial statements since they were initially presented on the web site.
(b) Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Income Statement
2017 2016
Revenue Capital Total Revenue Capital Total
Note £’000 £’000 £’000 £’000 £’000 £’000
Net gains on investments 10 – 232,376 232,376 – 29,674 29,674
Investment income 3 43,676 – 43,676 39,027 5,229 44,256
Other income 3 1 – 1 46 – 46
Investment management fee 4 (3,615) (6,026) (9,641) (3,111) (5,185) (8,296)
Portfolio transaction costs 5 – (2,651) (2,651) – (1,925) (1,925)
Other expenses 5 (750) – (750) (689) – (689)
Net return before finance costs and tax 39,312 223,699 263,011 35,273 27,793 63,066
Finance costs 6 (249) (415) (664) (254) (424) (678)
Return on ordinary activities before tax 39,063 223,284 262,347 35,019 27,369 62,388
Tax on ordinary activities 7 – – – (36) – (36)
Return attributable to
equity shareholders 39,063 223,284 262,347 34,983 27,369 62,352
Returns per Ordinary Share 9 41.59p 237.73p 279.32p 36.93p 28.89p 65.82p
The Board declared on 26 January 2018 a final dividend of 19.75p per Ordinary Share and a special dividend of 6.70p per
Ordinary Share. The Board also declared on 27 July 2017 an interim dividend of 9.05p per Ordinary Share.
The total column of this statement is the profit and loss account of the Company. All revenue and capital items in the above
statement derive from continuing operations. No operations were acquired or discontinued in the year. A Statement of
Comprehensive Income is not required as all gains and losses of the Company have been reflected in the above statement.
The accompanying notes form an integral part of this statement.

Reconciliation of Movements in Shareholders’ Funds
Capital
Share redemption Special Capital Revenue
capital reserve reserve reserve reserve Total
Note £’000 £’000 £’000 £’000 £’000 £’000
Balance as at 31 December 2016 944 44 166,343 983,250 69,647 1,220,228
Return on ordinary activities after taxation – – – 223,284 39,063 262,347
Equity dividends paid 8 – – – – (28,791) (28,791)
Purchase of Ordinary Shares 14 (14) 14 (18,142) – – (18,142)
Balance as at 31 December 2017 930 58 148,201 1,206,534 79,919 1,435,642

Capital
capital reserve reserve reserve reserve Total
Note £’000 £’000 £’000 £’000 £’000 £’000
Return on ordinary activities after taxation – – – 27,369 34,983 62,352
Equity dividends paid 8 – – – – (27,721) (27,721)
Purchase of Ordinary Shares 14 (6) 6 (6,282) – – (6,282)

Balance Sheet
2017 2016
Note £’000 £’000
Fixed assets
Investments at fair value through profit or loss 10 1,440,496 1,253,247
Current assets
Debtors 11 3,649 2,881
Cash at bank 293 241
3,942 3,122
Creditors (amounts falling due within one year) 12 (199) (36,141)

Net current assets/(liabilities) 3,743 (33,019)
TOTAL ASSETS LESS CURRENT LIABILITIES 1,444,239 1,220,228

Creditors (amounts falling due after more than one year) 13 (8,597) –
TOTAL NET ASSETS 1,435,642 1,220,228
CAPITAL AND RESERVES: EQUITY INTERESTS

Called up share capital 14 930 944
Capital redemption reserve 15 58 44
Special reserve 15 148,201 166,343
Capital reserve 15 1,206,534 983,250
Revenue reserve 15 79,919 69,647
TOTAL SHAREHOLDERS’ FUNDS 1,435,642 1,220,228
NET ASSET VALUE PER ORDINARY SHARE 16 1,543.72p 1,292.57p
Approved and authorised for issue by the Board of Directors on 26 January 2018 and signed on its behalf by:
Paul Trickett,
Chairman

Cash Flow Statement
2017 2016
Note £’000 £’000
Operating activities
Net revenue before finance costs and tax 39,312 35,273
Tax recovered – 23
Receipt of special dividends taken to capital 3 – 5,229
Investment management fee charged to capital 4 (6,026) (5,185)
Increase in debtors (768) (215)
Decrease in other creditors (17) (40)
Net cash inflow from operating activities 32,501 35,085
Investing activities
Purchases of investments (301,163) (231,112)
Sales of investments 343,405 201,136
Cash inflow/(outflow) from investing activities 42,242 (29,976)
Financing activities
Purchases of Ordinary Shares 14 (18,142) (6,282)
Equity dividends paid 8 (28,791) (27,721)
Interest and fees paid 17 (758) (640)
Net (repayment)/drawdown of bank debt facilities (before any costs) 12, 13 (27,000) 28,750
Cash outflow from financing activities (74,691) (5,893)
Change in cash during the period 52 (784)
Cash at the start of the period 241 1,025

Cash at the end of the period 293 241

Notes to the Financial Statements
1 Significant Accounting Policies
A summary of the principal accounting policies adopted, all of which have been applied consistently throughout the year and
the preceding year, is set out below.
(a) Basis of accounting

The financial statements have been presented under Financial Reporting Standard 102 (FRS 102) and under the AIC’s Statement
of Recommended Practice “Financial Statements of Investment Trust Companies and Venture Capital Trusts” (SORP) issued in
2014, updated in January 2017. The financial statements have been prepared on a going concern basis under the historical cost
convention, modified to include the revaluation of the Company’s investments as described below. The functional and
presentation currency is pounds sterling, which is the currency of the environment in which the Company operates. The Board
confirms that no significant accounting judgements or estimates have been applied to the financial statements and therefore
there is a not a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next
financial year.
(b) Investments
The Company’s investments have been categorised as “financial assets at fair value through profit or loss” as the Company’s
business is to invest in financial assets with a view to profiting from their total return in the form of capital growth and income.
Quoted investments are valued at their fair value, which is represented by the bid price. Where trading in the securities of an
investee company is suspended, the investment is valued at the Board’s estimate of its fair value. Purchases and sales of
investments are accounted for on trade date. Gains and losses arising from changes in fair value are included in the capital
return for the period and transaction costs on acquisition or disposal of a security are expensed to the capital reserve.
(c) Income
Dividends receivable on quoted equity shares are accounted for on the ex dividend date as revenue, except where, in the
opinion of the Board, the dividend is capital in nature, in which case it is treated as a return of capital. Where the Company has
elected to receive its dividends in the form of additional shares rather than in cash, an amount equivalent to the cash dividend
is recognised as income. Any surplus or deficit in the value of the shares received compared to the cash dividend forgone is
recognised as capital. Other income is accounted for on an accruals basis.
(d) Expenses
All expenses are accounted for on an accruals basis. Expenses are charged to revenue except as follows:
• expenses that are related to the acquisition and disposal of an investment are charged to capital; and
• expenses are charged to capital reserve where a connection with the maintenance or enhancement of the value of the
investments can be demonstrated. In this respect the investment management fee has been allocated 62.5% to capital
reserve and 37.5% to revenue reserve, in line with the Board’s expected long-term split of returns, in the form of capital
gains and income respectively, from the investment portfolio of the Company.
(e) Finance costs

Interest costs are accounted for on an accruals basis. Finance costs of debt, insofar as they relate to the financing of the
Company’s investments or to financing activities aimed at maintaining or enhancing the value of the Company’s investments,
are allocated 62.5% to capital reserve and 37.5% to revenue reserve, in line with the Board’s expected long-term split of
returns, in the form of capital gains and income respectively, from the investment portfolio of the Company.
The arrangement fee in relation to the £125 million bank debt facility is being amortised over the expected life of the facility
(with 62.5% allocated to capital reserve and 37.5% to revenue reserve) on a straight line basis. The unamortised value of these
costs is deducted from the fair value of the bank debt facility.
(f) Capital reserve

The following are accounted for in this reserve:
• gains and losses on the realisation of investments;
• increases and decreases in the valuation of investments held at the year end;
• gains on the return of capital by way of investee companies paying dividends capital in nature; and
• expenses, together with the related taxation effect, charged to this reserve in accordance with the above policies.
(g) Special reserve

This reserve may be treated as distributable profits for all purposes, excluding the payment of dividends. The cost of purchasing
Ordinary Shares for cancellation is accounted for in this reserve.
(h) Revenue reserve

This reserve represents the only reserve from which dividends can be funded.

2 Alternative Performance Measures
Alternative Performance Measures (“APMs”) are measures that are not defined by FRS102. The Company believes that APMs,
referred to as “Key Performance Indicators” on page 6, provide shareholders with important information on the Company and
are appropriate for an investment trust company. These APMs are also a component of the internal management reporting
to the Board. A glossary of the APMs can be found on page 56.
3 Income
2017 2016
£’000 £’000 £’000 £’000 £’000 £’000
Income from investments

UK dividends 42,002 – 42,002 36,816 5,229 42,045
Overseas dividends 852 – 852 1,623 – 1,623
Property income distributions 822 – 822 588 – 588
43,676 – 43,676 39,027 5,229 44,256
Other income
Underwriting commission – – – 46 – 46
Deposit interest 1 – 1 – – –
Total income 43,677 – 43,677 39,073 5,229 44,302
During the year the Company received special dividends amounting to £882,000 (2016: £7,084,000), of which none (2016:
£5,229,000) were considered as a return of capital by the investee company.
4 Investment Management Fee
2017 2016
£’000 £’000 £’000 £’000 £’000 £’000
Investment management fee 3,615 6,026 9,641 3,111 5,185 8,296
Details of the investment management contract can be found on page 19.
5 Other Expenses
2017 2016
£’000 £’000
The following expenses (including VAT, where applicable) have been charged to revenue:
Depositary fee 180 169
Directors’ fees (refer to Directors’ Remuneration Report) 136 135
Secretarial services 98 96
Registrar fee 74 72
Custody and other bank charges 59 51
FCA and LSE listing fees 57 59
Auditor’s fee – audit of the financial statements 24 23
– for non-audit services – –
AIC fees 21 21
Legal fees 20 18
Directors’ and Officers’ liability insurance 11 11
Other expenses 70 34
750 689

5 Other Expenses (continued)

Expenses incurred in acquiring or disposing of investments classified at fair value through profit or loss, and charged to capital,
are analysed below:
2017 2016
£’000 £’000
Analysis of total purchases
Purchase consideration before expenses 298,903 229,487
Commissions 610 502
Taxes 1,416 1,064
Total purchase expenses 2,026 1,566
Total purchase consideration 300,929 231,053
Analysis of total sales
Sales consideration before expenses 344,030 201,495
Commissions (625) (359)
Total sale proceeds net of expenses 343,405 201,136
Total expenses incurred in acquiring/disposing of investments 2,651 1,925
6 Finance Costs
2017 2016
£’000 £’000 £’000 £’000 £’000 £’000
Interest/non-utilisation costs on bank debt facility 229 383 612 239 399 638
Amortisation of bank debt facility costs 20 32 52 15 25 40
249 415 664 254 424 678
7 Taxation
Analysis of tax charged on return on ordinary activities
2017 2016
£’000 £’000 £’000 £’000 £’000 £’000
UK corporation tax charge for the year (see below) – – – – – –
Factors affecting current tax charge for the year

The tax assessed for the period is lower than the standard rate of corporation tax in the UK for a large company. The differences
are explained below:
Total returns on ordinary activities before tax 39,063 223,284 262,347 35,019 27,369 62,388
Notional corporation tax at 19% (2016: 20%) 7,422 42,424 49,846 7,004 5,474 12,478
Adjusted for the effects of:
Non-taxable UK dividend income (7,917) – (7,917) (7,363) (1,046) (8,409)
Non-taxable overseas dividend income (225) – (225) (325) – (325)
Expenses not deductible for tax purposes – 504 504 – 385 385
Excess expenses for which no relief has been taken 720 1,223 1,943 684 1,122 1,806
Non-taxable capital gains – (44,151) (44,151) – (5,935) (5,935)
UK corporation tax charge for the year – – – – – –
Irrecoverable overseas taxation suffered – – – 36 – 36
Total tax charge for the year – – – 36 – 36
The Company has not recognised a potential asset for deferred tax of £22,164,000 (2016: £21,294,000) in respect of unutilised
management expenses because it is unlikely that there will be suitable taxable profits from which the future reversal of a
deferred tax asset may be deducted. The current main rate of corporation tax is 19% (2016: 20%).

8 Dividends
2017 2016
£’000 £’000
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 December 2016 of 18.75p
(2015: 17.85p) paid on 3 March 2017 17,696 16,962
Special dividend for the year ended 31 December 2016 of 2.75p
(2015: 2.75p) paid on 3 March 2017 2,595 2,613
Interim dividend for the year ended 31 December 2017 of 9.05p
(2016: 8.60p) paid on 24 August 2017 8,500 8,146
28,791 27,721
Amounts not recognised in the period:
Final dividend for the year ended 31 December 2017 of 19.75p
(2016: final dividend of 18.75p) payable on 6 March 2018 18,367 17,696
Special dividend for year ended 31 December 2017 of 6.70p
(2016: 2.75p) payable on 6 March 2018 6,231 2,595
24,598 20,291
The final dividend and the special dividend have not been included as liabilities in these financial statements.
9 Returns per Ordinary Share
2017 2016
The returns per Ordinary Share are based on:

Returns attributable to Ordinary Shareholders £262,347,000 £62,352,000
Weighted average number of shares in issue during the year 93,923,545 94,730,414
Return per Ordinary Share 279.32p 65.82p
There are no dilutive or potentially dilutive shares in issue.
10 Investments
2017 2016
£’000 £’000
Investments at fair value through profit or loss
Opening fair value 1,253,247 1,195,581
Opening fair value adjustment (9,457) 4,640
Opening book cost 1,243,790 1,200,221
Purchases at cost 298,903 229,487
Sale proceeds (344,030) (201,495)
Realised gains on sales 82,525 15,577
Closing book cost 1,281,188 1,243,790
Closing fair value adjustment 159,308 9,457
Closing fair value 1,440,496 1,253,247
All investments are in ordinary shares listed on the London Stock Exchange unless otherwise stated on pages 14 to 16.
Gains/(losses) on investments:
Net realised gains on sales 82,525 15,577
Movement in fair value adjustment 149,851 14,097
Net gains on investments 232,376 29,674

10 Investments (continued)
In accordance with FRS 102 fair value measurements have been classified using the fair value hierarchy:
Level 1 - using unadjusted quoted prices for identical instruments in an active market;
Level 2 - using inputs, other than quoted prices included within Level 1, that are directly or indirectly observable (based on
market data); and
Level 3 - using inputs that are unobservable (for which market data is unavailable).
Investments held at fair value through profit or loss
Level 1 Level 2 Level 3 Total
As at 31 December 2017 £'000 £'000 £'000 £'000
Listed equities 1,440,496 – – 1,440,496
Unlisted equities – – – –
Total financial asset investments 1,440,496 – – 1,440,496
Level 1 Level 2 Level 3 Total

As at 31 December 2016 £'000 £'000 £'000 £'000
Listed equities 1,253,247 – – 1,253,247
Unlisted equities – – – –
Total financial asset investments 1,253,247 – – 1,253,247
11 Debtors
2017 2016
£’000 £’000
Investment income receivable 3,610 2,841
Other debtors 39 40
3,649 2,881
12 Creditors: Amounts falling due within one year

2017 2016
£’000 £’000
Amounts due to brokers – 234

Other creditors 199 175
Bank debt facility (See Note 13) – 35,750
Less: Unamortised costs (See Note 13) – (18)
199 36,141
13 Creditors: Amounts falling due after more than one year

2017 2016
£’000 £’000
Bank debt facility 8,750 –
Less: Unamortised costs (153) –
8,597 –
Borrowing facilities
On 16 May 2017, the Company extended the unsecured £125 million Facility Agreement with The Royal Bank of Scotland plc for
a further three years. A 0.15% arrangement fee was paid in connection with the extension in June 2017. This is being amortised
over the expected life of the facility. Under the facility, all funds drawn down attract interest at a margin of 0.80% over LIBOR.
A non-utilisation fee is also payable on any undrawn element at a rate ranging from 0.30% to 0.50%, depending on the level of
utilisation.
The main covenant under the facility requires that, at every month end, total borrowings shall not exceed 25% of the Company’s
total adjusted gross assets. There were no breaches of the covenants during the year. As at 31 December 2017, total borrowings
represented 0.6% of total adjusted gross assets (as defined by Facility Agreement). The facility is due to expire on 15 June 2020.

14 Share Capital
2017 2016
No. of No. of
Shares £’000 Shares £’000
Authorised:
Ordinary Shares of 1p 333,299,254 3,333 333,299,254 3,333
Allotted, issued and fully paid:
Ordinary Shares of 1p 92,999,137 930 94,403,292 944
During the year, the Company bought in and cancelled 1,404,155 shares (2016: 620,500) at a total cost of £18,142,000 (2016:
£6,282,000). During the period 1 January to 26 January 2018, the Company bought in and subsequently cancelled 67,000
shares at a total cost of £912,000.
15 Capital and Reserves

Capital
capital reserve reserve reserve reserve TOTAL
£’000 £’000 £’000 £’000 £’000 £’000
At 31 December 2015 950 38 172,625 955,881 62,385 1,191,879
Net gains on sale of investments – – – 15,577 – 15,577
Movement in fair value adjustment – – – 14,097 – 14,097
Cost of investment transactions – – – (1,925) – (1,925)
Management fees charged to capital – – – (5,185) – (5,185)
Finance costs charged to capital – – – (424) – (424)
Special dividends taken to capital – – – 5,229 – 5,229
Revenue return attributable to equity
shareholders – – – – 34,983 34,983
Equity dividends paid – – – – (27,721) (27,721)
Purchase of Ordinary Shares (6) 6 (6,282) – – (6,282)
At 31 December 2016 944 44 166,343 983,250 69,647 1,220,228
Net gains on sale of investments – – – 82,525 – 82,525
Movement in fair value adjustment – – – 149,851 – 149,851
Cost of investment transactions – – – (2,651) – (2,651)
Management fees charged to capital – – – (6,026) – (6,026)
Finance costs charged to capital – – – (415) – (415)
Revenue return attributable to equity
shareholders – – – – 39,063 39,063
Equity dividends paid – – – – (28,791) (28,791)
Purchase of Ordinary Shares (14) 14 (18,142) – – (18,142)
At 31 December 2017 930 58 148,201 1,206,534 79,919 1,435,642
16 Net asset value per share

The net asset value per share and the net assets attributable to the Ordinary Shares at the year end are calculated in
accordance with their entitlements in the Articles of Association and were as follows:
2017 2016
Net assets attributable £1,435,642,000 £1,220,228,000
Ordinary Shares in issue at the end of year 92,999,137 94,403,292
Net asset value per Ordinary Share 1,543.72p 1,292.57p
Effect of dividends received reinvested on the respective ex-dividend dates 34.29p 34.52p
Net asset value on a total return basis 1,578.01p 1,327.09p
The net asset value total return for the year end 31 December 2017 is the percentage movement from the net asset value as
at 31 December 2016 of 1,292.57p (31 December 2015: 1,254.30p) to the net asset value, on a total return basis, at
31 December 2017 of 1,578.01p (31 December 2016: 1,327.09p), which is 22.1% (2016: 5.8%).

17 Interest and Finance Costs Paid
2017 2016
£’000 £’000
Interest/non-utilisation costs on bank debt facility (758) (640)
18 Analysis of changes in net debt
Net debt Other Net debt at

at 1 January Cash non-cash 31 December
2017 flow movements 2017
£’000 £’000 £’000 £’000
Cash at bank 241 52 – 293

Bank debt facility (35,750) 27,000 – (8,750)
Bank debt facility fee (see notes 12 and 13) 18 187 (52) 153
(35,491) 27,239 (52) (8,304)
19 Financial instruments and risk management

The Company’s financial instruments comprise its investment portfolio (see pages 14 to 16), cash balances, bank debt facilities,
debtors and creditors that arise directly from its operations such as sales and purchases awaiting settlement, and accrued
income. Bank debt facilities are utilised when the Managers believe it is in the interest of the Company to gear the portfolio.
Note 1 sets out the significant accounting policies, including criteria for recognition of and the basis of measurement applied
for significant financial instruments excluding cash at bank, which is carried at fair value. Note 1 also includes the basis on which
income and expenses arising from financial assets and liabilities are recognised and measured.
The main risks that the Company faces arising from its financial instruments are:
(i) Interest rate risk, being the risk that the interest receivable/payable and the market value of investment holdings may
fluctuate because of changes in market interest rates. The Company’s investment portfolio is not directly exposed to
interest rate risk.
(ii) Liquidity risk is the risk that the Company will encounter difficulty raising funds to meet its cash commitments as they fall
due. Liquidity risk may result from either the inability to sell financial instruments quickly at their fair values or from the
inability to generate cash inflows as required.
(iii) Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that
it has entered into with the Company.
(iv) Market price risk is the risk that the market value of investment holdings will fluctuate as a result of fluctuations in market
prices caused by factors other than interest rate or currency rate movement.
The Company’s financial instruments are all denominated in sterling and therefore the Company is not directly exposed to
significant currency risk. However, it is recognised that most investee companies, whilst listed in the UK, will be exposed to
global economic conditions and currency fluctuations.
(i) Interest rate risk
The Company’s policy is to hold cash in variable rate bank accounts and not usually to invest in fixed rate securities. Cash deposit
balances are held on variable rate bank accounts yielding 0.10% as at 31 December 2017 (2016: 0.01%).
The Company has a bank debt facility of £125,000,000 of which £8,750,000 was drawn down as at 31 December 2017 (2016:
debt facility of £125,000,000, of which £35,750,000 was drawn down). Further details of this facility can be found in Notes 12
and 13.
If LIBOR and the bank base rate had been 1% point higher at 31 December 2017, the impact on the profit or loss and therefore
Shareholders’ funds would have been negative £87,500 per annum (2016: negative £357,500). If LIBOR and the bank base rate had
been 0.25% point lower at 31 December 2017, the impact on the profit or loss and therefore Shareholders’ funds would have been
a positive £21,875 per annum (2016: positive £89,375). There would be no direct impact on the portfolio valuation. The
calculations are based on the cash balances as at the respective balance sheet dates and are not representative of the year as
a whole and assume all other variables remain constant. The level of change is considered to be a reasonable illustration based
on current market conditions.

19 Financial instruments (continued)
(ii) Liquidity risk
The Company’s assets comprise mainly readily realisable equity securities, which, if necessary, can be sold to meet funding
requirements. Short term funding flexibility can be achieved through the use of bank debt facilities. The Company’s current
liabilities all have a remaining contractual maturity of less than three months with the exception of the bank debt facility.
(iii) Credit risk
The Company invests in UK equities traded on the London Stock Exchange. Investment transactions are carried out with a number
of FCA regulated brokers, with trades typically undertaken on a delivery versus payment basis and on a short settlement period.
The investment portfolio assets of the Company are held by The Northern Trust Company, the Company’s custodian, in a
segregated account. In the event of the bankruptcy or insolvency of Northern Trust the Company’s rights with respect to the
securities held by the custodian may be delayed or limited. The Secretaries and the Depositary monitor the Company’s risk by
reviewing Northern Trust’s credit ratings and their internal control report. Cash at bank is held with reputable banks with
acceptable external credit ratings. Outstanding investment income is reconciled to receipts on payment date.
The exposure to credit risk at the year-end comprises:
2017 2016
£’000 £’000
Investment income receivable 3,610 2,841

Cash at bank 293 241
3,903 3,082
(iv) Market price risk

The Company’s investment portfolio is exposed to market price fluctuations, which are monitored by the investment managers
in pursuance of the investment objective. Further information on the investment portfolio is set out in the Managers’ Report
on pages 8 to 12. It is not the Managers’ policy to use derivatives or hedging instruments to manage market price risk.
If the investment portfolio valuation fell by 10% at 31 December 2017, the impact on the profit or loss and therefore
Shareholders’ funds would have been negative £144.0m (2016: negative £125.3m). If the investment portfolio valuation rose
by 10% at 31 December 2017, the impact on the profit or loss and therefore Shareholders’ funds would have been positive
£144.0m (2016: positive £125.3m). The calculations are based on the portfolio valuation as at the respective balance sheet
dates, are not representative of the year as a whole and assume all other variables remain constant. The level of change is
considered to be a reasonable illustration based on historic stockmarket volatility.
As at 31 December 2017, all of the Company’s financial instruments (excluding loans) were included in the balance sheet at fair
value. The investment portfolio consisted of investments, other than two investments that have been fair valued at £nil (see
note 10), valued at their bid price, which represents fair value. Any cash balances, which are held in variable rate bank accounts,
can be withdrawn on demand with no penalty.
Maturity profile of the Company’s financial liabilities

Due or Due Due Due
due no between between between
later than 1 and 3 and 1 and Due after
(All in £’000) 1 month 3 months 12 months 5 years 5 years Total
Liabilities:
Bank debt facility – 79 – 8,750 – 8,829
Unamortised costs – – – (153) – (153)
Amounts due to brokers – – – – – –
Other creditors 90 30 – – – 120
Total liabilities 90 109 – 8,597 – 8,796

19 Financial instruments (continued)
Due or Due Due Due
due no between between between
later than 1 and 3 and 1 and Due after
(All in £’000) 1 month 3 months 12 months 5 years 5 years Total
Liabilities:
Bank debt facility 2 36 35,750 – – 35,788
Unamortised costs – – (18) – – (18)
Amounts due to brokers 234 – – – – 234
Other creditors 107 30 – – – 137
Total liabilities 343 66 35,732 – – 36,141
Cash flows payable under financial liabilities by remaining contractual maturities

Due Due
Due between between
On within 3 and 1 and Due after
(All in £’000) demand 3 months 12 months 5 years 5 years Total
Bank debt facility – 171 521 9,838 – 10,530

Amounts due to brokers – – – – – –
Other creditors – 199 – – – 199
– 370 521 9,838 – 10,729
Cash flows payable under financial liabilities by remaining contractual maturities

Due Due
Due between between
On within 3 and 1 and Due after
(All in £’000) demand 3 months 12 months 5 years 5 years Total
Bank debt facility – 187 35,997 – – 36,184

Amounts due to brokers – 234 – – – 234
Other creditors – 136 – – – 136
– 557 35,997 – – 36,554
Capital Management Policies and Procedures

The Company’s capital management objectives are to support the Company’s objective and to ensure that the Company will
be able to continue as a going concern.
This is achieved through the appropriate balance of equity capital and gearing. Further details can be found in the Strategic
Report. The Company does not have any externally imposed capital requirements other than the covenant on its bank debt
facility as set out in Note 13.
20 Related Party Transactions

Directors’ fees and their shareholdings are detailed in the Directors’ Remuneration Report on pages 31 and 32. There were no
matters requiring disclosure under s412 of the Companies Act 2006.

21 Contingencies, guarantees, financial commitments and contingent assets
The Company had no contingencies, guarantees or financial commitments as at 31 December 2017 (2016: nil). Since 2007,
investment management fees incurred by the Company have been exempt from VAT. The Company recovered much of the
VAT it suffered prior to the change in UK law, together with simple interest, during 2008. The Managers have continued to
pursue further recoveries since then, with claims stayed pending the outcome of a variety of relevant lead court cases. These
cases concluded with judgements in favour of HM Revenue & Customs during 2017. Accordingly, the Board does not now
expect any further recoveries in this regard.
22 Company information
Aberforth Smaller Companies Trust plc is a closed-ended investment company, registered in Scotland No SC126524, with its
Ordinary Shares listed on the London Stock Exchange. The address of the registered office is 14 Melville Street, Edinburgh,
EH3 7NS.

Notice of the Annual General Meeting
Notice is hereby given that the twenty-seventh Annual General Meeting of Aberforth Smaller Companies Trust plc will
be held at 14 Melville Street, Edinburgh on 1 March 2018 at 6.00 p.m. for the following purposes:
To consider and, if thought fit, pass the following Ordinary Resolutions:
1. That the Report and Financial Statements for the year ended 31 December 2017 be adopted.
2. That the Directors’ Remuneration Report for the year ended 31 December 2017 be approved.
3. That a special dividend of 6.70p per share and a final dividend of 19.75p per share be approved.
4. That Mr S P Trickett be re-elected as a Director.
5. That Mr R A Rae be re-elected as a Director.
6. That Mrs J Le Blan be re-elected as a Director.
7. That Mrs P M Hay-Plumb be re-elected as a Director.
8. That Deloitte LLP be re-appointed as Auditor.
9. That the Audit Committee be authorised to determine the remuneration of the Auditor for the year to
31 December 2018.
To consider and, if thought fit, pass the following Special Resolution:

10. That pursuant to and in accordance with its Articles of Association, the Company be and is hereby 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 of 1p each in the capital of the Company (“Shares”), provided that:
(a) the maximum number of Shares hereby authorised to be purchased shall be 13,930,527 (or if less, 14.99% of
the issued share capital of the Company on the date on which this resolution is passed);
(b) the minimum price which may be paid for a Share shall be 1p being the nominal value of a Share;
(c) the maximum price (exclusive of expenses) which may be paid for a Share shall be the higher of (i) 5% above
the average of the middle market quotations (as derived from the London Stock Exchange Daily Official List)
for the Shares for the five business days immediately preceding the date of purchase and (ii) the higher of the
price of the last independent trade and the highest current independent bid on the trading venue where the
purchase is carried out;
(d) unless previously varied, revoked or renewed, the authority hereby conferred shall expire on 31 July 2019 or,
if earlier, at the conclusion of the Annual General Meeting of the Company to be held in 2019, save that the
Company may, prior to such expiry, enter into a contract to purchase Shares under such authority which will
or might be executed wholly or partly after the expiry of such authority and may make a purchase of Shares
pursuant to any such contract.
Aberforth Partners LLP, Secretaries

26 January 2018
52 Annual General Meeting Aberforth Smaller Companies Trust plc

Notice of the Annual General Meeting
1. Attending the Annual General Meeting in person
A member who is entitled to attend and vote at this meeting is entitled to appoint one or more proxies to attend, speak and vote
on their behalf. Such a proxy need not also be a member of the Company.
To be entitled to attend and vote at the Annual General Meeting (and for the purpose of determining the votes they may cast),
members must be registered in the Company’s register of members at close of business on 27 February 2018 (or, if the Annual
General Meeting is adjourned, at close of business on the day two days (excluding non-working days) prior to the adjourned
meeting). Changes to the register of members after the relevant deadline will be disregarded in determining the rights of any
person to attend and vote at the Annual General Meeting.
2. Appointment of Proxy
A Form of Proxy for use by shareholders is enclosed. Completion of the Form of Proxy will not prevent a shareholder from
attending the meeting and voting in person. To register your vote electronically, log on to the Registrar’s web site at
www.signetshares.com and follow the instructions on screen.
You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. You may
not appoint more than one proxy to exercise rights attached to any one share. To appoint more than one proxy, please contact
the Registrar of the Company. If you submit more than one valid proxy appointment, the appointment received last before the
latest time for the receipt of proxies will take precedence.
To be valid the proxy form must be completed and lodged, together with the power of attorney or any authority (if any) under
which it is signed, or a notarially certified copy of such power of authority, with the Registrar of the Company no later than 48
hours (excluding non-working days) before the time set for the meeting, or any adjourned meeting.
CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for
the Annual General Meeting to be held on 1 March 2018 and any adjournment(s) thereof by using the procedures described in
the CREST Manual. The message must be transmitted so as to be received by the Company’s agent, Link Asset Services (CREST
Participant ID: RA10), no later than 48 hours before the time appointed for the meeting.
3. Questions and Answers
Pursuant to section 319A of the Companies Act 2006, the Company must provide an answer to any question that is put by a
member attending the AGM relating to the business being considered, except if a response would not be in the interest of the
Company or for the good order of the meeting or if to do so would involve the disclosure of confidential information. The
Company may, however, elect to provide an answer to a question, within a reasonable period of days after the conclusion of the
AGM.
4. Total Voting Rights
As at 26 January 2018, the latest practicable date prior to publication of this document, the Company had 92,932,137 Ordinary
Shares in issue with a total of 92,932,137 voting rights.
5. Information on the Company’s website
In accordance with section 311A of the Companies Act 2006, this notice of meeting, details of the total number of shares in
respect of which members are entitled to exercise voting rights at the AGM and, if applicable, any members’ statements,
members’ resolutions or members’ matters of business received by the Company after the date of this notice will be available
on the Managers’ website www.aberforth.co.uk.
6. Nominated Persons
Any person to whom this notice is sent who is a person nominated under Section 146 of the Companies Act 2006 to enjoy
information rights (a Nominated Person) may, under an agreement between such person and the shareholder nominating such
person, 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 such right, the Nominated Person may,
under any such agreement, have a right to give instructions to the registered shareholder as to the exercise of voting rights.
7. Audit concerns
The members of the Company may require the Company (without payment) to publish, on the website, a statement (which is
also to be passed to the auditor) setting out any matter relating to the audit of the Company’s accounts, including the auditor’s
report and the conduct of the audit. The Company will be required to do so once it has received such requests from either
members representing at least 5% of the total voting rights of the Company or at least 100 members who have a relevant right
to vote and hold shares in the Company on which there has been paid up an average sum per member of at least £100. Such
requests must be made in writing and must state the member’s full name and address and be sent to the registered address of
the Company.
Annual General Meeting Aberforth Smaller Companies Trust plc 53

Shareholder Information
Introduction
Aberforth Smaller Companies Trust plc is an Investment Trust whose shares are traded on the London Stock Exchange. As at
31 December 2017, it is the largest trust, based on net assets, within its sub-sector of UK Smaller Company Investment Trusts.
Shareholder register enquiries

All administrative enquiries relating to shareholders such as queries concerning holdings, dividend payments, notification of change
of address, loss of certificate or requests to be placed on a mailing list should be addressed to the Company’s Registrar:
Shareholder Solutions, Link Asset Services, The Registry, 34 Beckenham Road, Beckenham, BR3 4TU.
Tel: 0871 664 0300 (calls cost 12p per minute plus network extras, lines are open 9.00 am to 5.30 pm Monday to Friday).
Email: enquiries@linkgroup.co.uk. Website: www.linkassetservices.com.
Payment of dividends
The best way to ensure that dividends are received as quickly as possible is to instruct the Company’s Registrar, whose address is given
above, to pay them directly into a bank account; tax vouchers are then mailed to shareholders separately. This method also avoids
the risk of dividend cheques being delayed or lost in the post. The Company also operates a Dividend Re-investment Plan to allow
shareholders to use their cash dividends to buy shares easily and at a low cost via the Company’s Registrar from whom the necessary
forms are available.
Sources of further information

The prices of the Ordinary Shares are quoted daily in the Financial Times, The Times and The Scotsman. Company performance and
other relevant information are available on the Managers’ website at www.aberforth.co.uk and are updated monthly. The price,
together with the daily Net Asset Values and other financial data, can be found on the TrustNet website at www.trustnet.com. Other
websites containing useful information on the Company are www.FT.com and www.theaic.co.uk.
How to invest
The Company’s Ordinary Shares are traded on the London Stock Exchange. They can be bought or sold by placing an order with a
stockbroker, by asking a professional adviser to do so, or through most banks. The Company’s Managers, Aberforth Partners LLP, do
not offer any packaged products such as ISAs, Savings Schemes or Pension Plans.
Security Codes (Ordinary Shares)

SEDOL Bloomberg Reuters GIIN Legal Entity Identifier
0006655 ASL LN ASL.L U6SSZS.99999.SL.826 213800GZ9WC73A92Q326
Continuation Vote
The Company has no fixed duration. However, in accordance with the Articles of Association, an ordinary resolution will be
proposed at the Annual General Meeting to be held in 2020 (and at every third subsequent Annual General Meeting) that the
Company continues to manage its affairs as an investment trust.
Retail Distribution/NMPI Status

The Company’s shares are intended for UK investors including retail investors, professionally advised private clients and
institutional investors who are seeking exposure to smaller companies in the United Kingdom, and who understand and are willing
to accept the risks of exposure to equities.
The Company currently conducts its affairs, and intends to continue to conduct its affairs, so that its Ordinary Shares can be
recommended by Independent Financial Advisers (IFAs) to ordinary retail investors in accordance with the rules of the Financial
Conduct Authority (FCA) in relation to non-mainstream pooled investment (NMPI) products. The Company’s Ordinary Shares are
excluded from the FCA’s restrictions that apply to NMPI products because they are shares in an investment trust.
Please note that past performance is not a guide to the future. Your investment may be at risk as the value of investments may go
down as well as up and is not guaranteed. Therefore you may not get back the amount originally invested.
Individual Savings Accounts (ISA) Status

The Company’s Ordinary Shares are eligible for inclusion in the “Stocks and Shares” component of an ISA.
AIC
The Company is a member of The Association of Investment Companies which produces a detailed Monthly Information Service on
the majority of investment trusts. This can be obtained by contacting The Association of Investment Companies, 9th Floor, 24 Chiswell
Street, London EC1Y 4YY; Website: www.theaic.co.uk; Tel: 020 7282-5555.
54 Shareholder Information Aberforth Smaller Companies Trust plc

Financial Calendar
Dividends in respect of the year ended 31 December 2017
Interim Special Final
Rate per Share: 9.05p 6.70p 19.75p
Ex Dividend: 3 August 2017 8 February 2018 8 February 2018
Record date: 4 August 2017 9 February 2018 9 February 2018
Pay date: 24 August 2017 6 March 2018 6 March 2018
Half Yearly Report Published late July
Annual Report and Financial Statements Published late January
Annual General Meeting 1 March 2018
Publication of Net Asset Values Daily (via the Managers’ website)
Alternative Investment Fund Managers Directive (AIFMD)

The Company has appointed Aberforth Partners as its alternative investment fund manager (AIFM). In accordance with the AIFMD,
information in relation to the Company’s leverage is required to be made available to Shareholders. The Company’s maximum and
actual leverage levels as at 31 December 2017 are shown below. There have been no changes to, or breaches of the maximum level of
leverage employed by the Company.
2017 2016
Commitment Gross Commitment Gross
Leverage Exposure (refer to the Glossary) Method Method Method Method
Maximum limit 2.00:1 2.00:1 2.00:1 2.00:1

Actual 1.00:1 1.00:1 1.03:1 1.03:1
Furthermore, in accordance with the Directive, the AIFM’s remuneration policy and the numerical disclosures in respect of the AIFM’s
relevant reporting period (year ended 30 April 2017) are available on request from Aberforth Partners.
The Common Reporting Standard

On 1 January 2016 the OECD Common Reporting Standard for Automatic Exchange of Financial Account information (‘Common
Reporting Standard’) came into effect.
The legislation requires investment trust companies to provide personal information to HMRC on certain investors who purchase
shares in investment trusts. Accordingly Aberforth Smaller Companies Trust plc will have to provide information annually to the local
tax authority on the tax residencies of a number of non-UK based certificated shareholders and corporate entities.
All new shareholders, excluding those whose shares are held in CREST, who come on to the share register will be sent a certification
form for the purposes of collecting this information.
For further information, please see HMRC’s Quick Guide: Automatic Exchange of Information – information for account holders
https://www.gov.uk/government/publications/exchange-of-information-account-holders.
Beware of Share Fraud

Shareholders may receive unsolicited phone calls or correspondence concerning investment matters that imply a connection to the
Company. These are typically from overseas based ‘brokers’ who target UK shareholders offering to sell them what often turn out
to be worthless or high risk shares. Shareholders may also be advised that there is an imminent offer for the Company, and the caller
may offer to buy shares at significantly above the market price if an administration fee is paid. This is known as ‘boiler room fraud’.
You can find more information about investment scams at the Financial Conduct Authority (FCA) website:
www.fca.org.uk/consumers/protect-yourself-scams. You can also call the FCA Consumer Helpline on 0800 111 6768.
Shareholder Information Aberforth Smaller Companies Trust plc 55

Glossary of UK GAAP Measures
Net Asset Value, also described as Shareholders’ Funds, is the value of total assets less all liabilities. The Net Asset Value,
or NAV, per Ordinary Share is calculated by dividing this amount by the total number of Ordinary Shares in issue.
Gearing represents the amount by which total investments exceed Shareholders’ Funds, expressed as a percentage of
Shareholders’ Funds. If stockmarkets rise, gearing can increase the Company’s returns, but, if they fall, losses will be
greater. If the amount calculated is a negative percentage then total investments are less than Shareholders’ Funds.
Glossary of Alternative Performance Measures

Net Asset Value per Ordinary Share (Total Return) represents the theoretical return on NAV per Ordinary Share,
assuming that dividends paid to shareholders were reinvested at the NAV per Ordinary Share at the close of business on
the day the shares were quoted ex dividend (see note 16 on page 47).
Share Price Total Return represents the theoretical return to a shareholder, on a closing market price basis, assuming
that all dividends received were reinvested, without transaction costs, into the Ordinary Shares of the Company at the
close of business on the day the shares were quoted ex dividend. The share price as at 31 December 2017 was 1326.00p
(2016: 1109.00p) and dividends, which went ex dividend during the year (see note 8 on page 45) were 30.55p (2016:
29.20p). The effect of reinvesting these dividends on the respective ex-dividend dates amounted to 34.11p (2016:
33.37p). The share price total return was therefore 22.6% (2016: -4.2%), being the sum of the closing share price, plus
the reinvestment dividend figure, divided by the closing share price at the previous year end.
Discount is the amount by which the stockmarket price per Ordinary Share is lower than the Net Asset Value, or NAV,
per Ordinary Share. The discount is normally expressed as a percentage of the NAV per Ordinary Share. The opposite of
a discount is a premium.
Benchmark Total Return is the return on the benchmark, on a closing market price basis, assuming that all dividends
received were reinvested into the shares of the underlying companies at the time their shares were quoted ex dividend.
Further information on the Company’s benchmark, the Numis Smaller Companies Index (excluding Investment
Companies), can be found on page 4.
Performance Attribution is an analysis of how the Company achieved its performance relative to its benchmark. Sector
and stock selection measures the effect of investing in sectors and securities to a greater or lesser extent than their
weighting in the benchmark.
Active share ratio is calculated by summing the absolute differences between a portfolio’s weight in a stock and an
index’s weight in a stock for all the stocks in the portfolio or index. The total is then divided by two to give a ratio
between 0% and 100%. Active Share is addressed in “How Active Is Your Fund Manager?” (Antti Petajisto and Martijn
Cremers Yale School of Management, 2009).
Ongoing Charges represent the total cost of investment management fees and other operating expenses of £10,391,000
(2016: £8,985,000), as disclosed in the Income Statement, as a percentage of the average published net asset value
£1,363,794,000 (2016: £1,121,430,000) over the period and are calculated in accordance with the guidelines issued by
the AIC.
Leverage for the purposes of the AIFM Directive, is any method which increases the Company’s exposure to
stockmarkets whether through borrowings, derivatives or any other means. It is expressed as a ratio of the Company’s
exposure to its NAV. In summary, the gross method measures the Company’s exposure before applying hedging or
netting arrangements. The commitment method allows certain hedging or netting arrangements to be offset. ASCoT has
no hedging or netting arrangements.
Portfolio Turnover is calculated by summing the lesser of purchases and sales over one year divided by the average
portfolio value for that year.
56 Shareholder Information Aberforth Smaller Companies Trust plc

Corporate Information
Investment Managers and Secretaries Solicitors and Sponsors

Aberforth Partners LLP Dickson Minto W.S.
14 Melville Street 16 Charlotte Square
Edinburgh EH3 7NS Edinburgh EH2 4DF
Tel: 0131 220 0733
Email: enquiries@aberforth.co.uk Bankers
www.aberforth.co.uk
The Royal Bank of Scotland plc
36 St Andrew Square
Registered Office and Company Number Edinburgh EH2 2YB
14 Melville Street
Edinburgh EH3 7NS Custodian
Registered in Scotland No. SC 126524
The Northern Trust Company
50 Bank Street
Registrar Canary Wharf
London E14 5NT
Link Asset Services
The Registry
34 Beckenham Road Independent Auditor
Beckenham Deloitte LLP
BR3 4TU Saltire Court
20 Castle Terrace
Shareholder enquiries:
Edinburgh EH1 2DB
Tel: 0871 664 0300
(Calls cost 12p per minute plus network extras)
Email: enquiries@linkgroup.co.uk Depositary
www.linkassetservices.com
National Westminster Bank plc
Share Portal: Trustee & Depositary Services
www.signalshares.com The Younger Building
1st Floor, 3 Redheughs Avenue
Edinburgh EH12 9RH
J. Thomson Colour Printers Aberforth Smaller Companies Trust plc

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Aberforth Smaller Companies Trust plc

Annual Report and Financial Statements

Notice of the Annual General Meeting 52

Shareholder Information & Glossary 54

Investor Disclosure Document

Total Return Performance

Net Asset Value per Ordinary Share2 22.1

Shareholders’ Funds1 £1,436m £1,220m 17.7

Absolute Performance over past year

Strategic Report Aberforth Smaller Companies Trust plc 1

Review of 2017 performance

2 Strategic Report Aberforth Smaller Companies Trust plc

Strategic Report Aberforth Smaller Companies Trust plc 3

4 Strategic Report Aberforth Smaller Companies Trust plc

Strategic Report Aberforth Smaller Companies Trust plc 5

Historic Total Returns

Ten Year Summary

6 Strategic Report Aberforth Smaller Companies Trust plc

Absolute Performance Relative Performance

Dividends and RPI Growth Premium/Discount

Strategic Report Aberforth Smaller Companies Trust plc 7

8 Strategic Report Aberforth Smaller Companies Trust plc

Strategic Report Aberforth Smaller Companies Trust plc 9

10 Strategic Report Aberforth Smaller Companies Trust plc

31 December 2017 31 December 2016

Number of companies 86 350 87 349

Strategic Report Aberforth Smaller Companies Trust plc 11

Aberforth Partners LLP

12 Strategic Report Aberforth Smaller Companies Trust plc

1 Vesuvius 52,338 3.6 Metal flow engineering

Strategic Report Aberforth Smaller Companies Trust plc 13

Value % of Total % of NSCI

Oil & Gas Producers 56,719 3.9 2.6

14 Strategic Report Aberforth Smaller Companies Trust plc

Value % of Total % of NSCI

Food Producers 20,791 1.4 2.8

Strategic Report Aberforth Smaller Companies Trust plc 15

Value % of Total % of NSCI

Real Estate Investment Trusts 35,139 2.4 5.4

Summary of Material Investment Transactions

16 Strategic Report Aberforth Smaller Companies Trust plc

FTSE Index Classification Exposure Analysis

Environmental, Human Rights, Employee, Social Community Issues

Strategic Report Aberforth Smaller Companies Trust plc 17

18 Governance Report Aberforth Smaller Companies Trust plc

Objective, Investment Policy, Investment Strategy, Dividend Policy and Risks

Return and Dividends

Governance Report Aberforth Smaller Companies Trust plc 19

Capital Structure and Share Buy-Backs

Continuation of the Company

Voting Rights of Shareholders

20 Governance Report Aberforth Smaller Companies Trust plc

Notifiable Share Interests

Annual General Meeting

Additional information in respect of the Companies Act 2006

Greenhouse Gas Emissions

Governance Report Aberforth Smaller Companies Trust plc 21

Post Balance Sheet Events

Disclosure of Information to Auditor