Many of the geo-political and economic issues that were the focus of our attention during 2022 continued dominate the headlines throughout 2023; the war in Ukraine; tension in the Taiwan Strait and the ongoing cost of living crisis. The horrendous events in Israel and Gaza since October 2023 have further exacerbated geopolitical tensions. Despite this backdrop, both the Company and equity markets generated positive returns in the second half of 2023. In the six months to 31 December 2023, the net asset value (“NAV”) total return was 7.3% while the share price delivered a total return of 12.9% The difference between these returns is reflected in the movement in the discount, which narrowed from 14.3% on 30 June 2023 to 10.0% at the end of the period. The Company outperformed the total return of its reference index, the Deutsche Numis Smaller Companies plus AIM (ex-investment companies) Index (the “reference index”) which was 5.5%. The volatility of the market and the NAV increased in the final quarter - the NAV and the market were both down over 6% in October, but up around 5% in November and up over 8% in December. By contrast, in the first three months of the period, monthly returns were never more than +/- 3%. Encouragingly, on a relative basis, the NAV outperformed the reference index in four out of the six months. The Investment Manager’s Review provides further information on individual stock performance and portfolio activity during the period, as well as the Investment Manager’s outlook for the portfolio and the wider smaller companies sector.

Earnings and Dividend

While net revenue after tax was up 3.2% to £5.1 million, revenue earnings per share (“EPS”) for the six months to 31 December 2023 increased by 12.8% to 6.00p (2022: 5.32p). At the aggregate level, gross dividend receipts were down 1.5%, partly as a result of the reduction in the portfolio required to fund the buy backs. The portfolio also benefited from being able to generate meaningful interest income from cash balances for the first time in many years. Total income was up 2.3% to £6.2 million. The analysis of the income forecast continues to indicate that the revenue account is in good health. The Board’s declared dividend policy is that it aims to pay around 1/3 of the expected total dividend for the year at the interim stage, with the balance being paid out once the annual results are known. Consequently, the Board is declaring an interim dividend of 3.70p per share (2023: 3.00p per share) which will be paid on 12 April 2024 to shareholders on the register on 15 March 2024 with an associated ex-dividend date of 14 March 2024. Based on the current forecast for earnings, the Board hopes to be able to at least maintain the final dividend for the year at 8.00p per share thus providing dividend growth for the year as a whole.


The Company has a £40 million revolving credit facility (“RCF”) with The Royal Bank of Scotland International which matures in November 2025. At the end of the period, the level of gearing, net of cash, was 1.9% (30 June 2023: 2.5%), with £25 million drawn down under the RCF at an interest rate of 6.48%.

Total returns to 31st of December 2023 

6 months


1 year


3 years


5 years


10 years


 NAV +7.3 +1.5 -16.2 +25.5 +81.7
 Share price +12.9 +1.9 -23.3 +22.6 +63.3
 Reference Index +5.5 +3.2 -3.3 +24.0 +50.3
 Peer Group weighted average (NAV) +6.6 +4.6 +3.2 +31.0 +77.4
 Peer Group weight average (share price) +9.6 +4.8 -3.4 +31.0 +78.6

Considered to be an Alternative Performance Measure.

Deutsche Numis Smaller Companies including AIM (ex investment companies) Index, prior to 1 January 2018 Numis Smaller Companies (ex investment companies) Index.

Source: abrdn and Refinitiv Datastream

Discount Control and Share Buy Backs

At 31 December 2023, the Company’s share price was trading at a discount of 10.0% to its NAV per share, including income with debt at fair value. This was narrower than the 14.3% discount at which the shares were trading at the end of June 2023. Between these two points there was significant volatility in the discount, particularly following the events in October, when we saw the average discount of all investment trusts reach levels not seen since the depths of the Global Financial Crisis. The performance of equity markets in the last couple of months of 2023 helped pull the industry back, but discounts remain wide across the UK smaller companies sector and investment trusts as a whole. As far as the discount of the Company is concerned, we did witness some narrowing towards the end of the period, but it remained at a level where the Board felt it was in the best interests of shareholders as a whole to continue to buy back shares. Consequently, the Company was active in the market on most days and bought back 7.1 million shares (8.1% of the opening issued share capital) at a weighted average price of 411.21p, which equated to an average discount of 13.2%.

The buy backs acted to enhance the NAV per share by 1.1%.

Investment Manager Investment Programme

The Board notes the announcement by abrdn plc in December that it was initiating a programme whereby it would invest six months’ worth of the management fees paid to it by the investment trusts it manages in buying shares of those trusts. We are pleased to welcome abrdn as a shareholder. Online Shareholder Presentation

In order to encourage as much interaction as possible with our shareholders, we will be hosting an Online Shareholder Presentation, which will be held at 10.00am on Tuesday 21 May 2024. At this event you will receive a presentation from the Investment Manager and have the opportunity to ask live questions of the Chairman and the Investment Manager. For any shareholders unable to attend, the event will be recorded and made available on the Company’s website. Full details on how to register for the online event can be found at: Details are also contained on the Company’s website.


A number of commentators have referred to the perceived value in the UK market relative to other markets and its own trading range. The sense is that valuations are so far out of kilter that there must be some reversion towards what would be considered more “normal” valuations. Such a turnaround does appear overdue and would undoubtedly be beneficial for UK domestic stocks, which have been hardest hit. At the same time, the recent release of the Q4 2023 GDP numbers means that the UK has been in a “technical recession”, and this has strengthened the case of the optimists for interest rate cuts which should be seen as beneficial to equity markets. However, when one looks further afield, the enthusiasm has to be tempered by the geopolitical situation; the war in Ukraine and the events in the Middle East, coupled with the uncertainty of the number of elections that are forecast to take place in 2024 means that the outlook has to remain very uncertain. Time will tell as to which factor will dominate over the coming months and there will doubtless be bumps in the road. There is also the concern that any recovery in the UK economy could be weak. With such an outlook, investors should benefit from a quality bias. A slowing of the global economy has been expected and quality companies can take measures to protect profits and deliver earnings growth against this backdrop. With the Investment Manager’s focus on such companies, the Board considers that the Company is well placed to meet its objective of achieving long-term capital growth for shareholders.

  • The value of investments, and the income from them, can go down as well as up and investors may get back less than the amount invested.
  • Past performance is not a guide to future results.
  • There is no guarantee that the market price of the Company’s shares will fully reflect their underlying Net Asset Value.
  • As with all stock exchange investments the value of the Trust shares purchased will immediately fall by the difference between the buying and selling prices, the bid-offer spread. If trading volumes fall, the bid-offer spread can widen.
  • The Company may borrow to finance further investment (gearing). The use of gearing is likely to lead to volatility in the Net Asset Value (NAV) meaning that any movement in the value of the company’s assets will result in a magnified movement in the NAV.
  • The Company may accumulate investment positions which represent more than normal trading volumes which may make it difficult to realise investments and may lead to volatility in the market price of the Company’s shares.
  • Yields are estimated figures and may fluctuate, there are no guarantees that future dividends will match or exceed historic dividends and certain investors may be subject to further tax on dividends.
  • The Company may charge expenses to capital which may erode the capital value of the investment.
  • The Alternative Investment Market (AIM) is a flexible, international market that offers small and growing companies the benefits of trading on a world-class public market within a regulatory environment designed specifically for them. AIM is owned and operated by the London Stock Exchange. Companies that trade on AIM may be harder to buy and sell than larger companies and their share prices may move up and down very sharply because they have lower trading volumes and also because of the nature of the companies themselves. In times of economic difficulty, companies listed on AIM could fail altogether and you could lose all your money.
  • The Company invests in smaller companies which are likely to carry a higher degree of risk than larger companies.
  • Specialist funds which invest in small markets or sectors of industry are likely to be more volatile than more diversified trusts.

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Issued by abrdn Fund Managers Limited, registered in England and Wales (740118) at 280 Bishopsgate, London, EC2M 4AG, authorised and regulated by the Financial Conduct Authority in the UK.