Aberdeen UK Smaller Companies Growth Trust plc (AUSC) has published its annual financial report for the year ended 30 June 2026, revealing a net asset value total return of -4.1% and a share price total return of -3.6%, both lagging the reference index's 6.1% gain. Alongside the results, the Board has announced a proposed combination with JPMorgan UK Small Cap Growth & Income plc (JUGI), to be implemented via a members' voluntary winding up under Section 110 of the Insolvency Act 1986. The trust, which targets long-term capital growth through investment in UK-quoted smaller companies, saw total assets fall 31.9% to £271.9 million. Shareholders will be offered the option to roll their holdings into JUGI shares or elect to receive cash at a 2% discount to NAV, subject to an aggregate cash limit of 35% of the Company's share capital.

Key Points

  • Aberdeen UK Smaller Companies Growth Trust plc (AUSC)
  • The Board has agreed heads of terms with JPMorgan UK Small Cap Growth & Income plc for a scheme of reconstruction expected to complete before end of 2026
  • NAV per share fell to 543.31p (from 581.37p); total dividends per share rose 6.1% to 14.00p; ongoing charges ratio improved to 0.77% from 0.85%
  • Investors should watch for shareholder circulars anticipated in late October or early November 2026 and the expected general meetings to approve the Scheme

AUSC NAV Falls 4.1% in Year to June 2026, Underperforming Deutsche Numis Reference Index by More Than Ten Percentage Points

For the year ended 30 June 2026, the Company's NAV total return fell by 4.1% and its share price total return declined by 3.6%, against a reference index return of 6.1% from the Deutsche Numis Smaller Companies plus AIM (ex investment companies) Index. The Board acknowledged this underperformance extends across one, three, and five years. The announcement states that stock-specific issues were the primary contributor to underperformance, rather than asset allocation, though it notes the Precious Metals and Mining sector returned more than 60% during the year, driven partly by gold, and that most peers with similar mandates also trailed the index.

Proposed Combination with JUGI via Section 110 Scheme of Reconstruction Announced 18 September 2026

The Board announced on 18 September 2026 that it had agreed heads of terms with JPMorgan UK Small Cap Growth & Income plc for a combination of the two trusts. The transaction follows a competitive private review process. Over the past five years, the Company bought back more than half of its issued share capital; during the year alone, 16.3 million shares were repurchased at a total cost of £83.7 million, equating to 26.5% of issued share capital. The Board stated that ongoing buybacks would likely continue reducing liquidity and the ability to grow, making combination with the larger JUGI the preferred outcome for shareholders. Shareholder documentation is expected to be published in late October or early November 2026.

Full-Year Dividend Rises 6.1% to 14.00p; Second Interim Dividend of 9.5p Payable 27 November 2026

Revenue return per share for the year was 13.90p, up 2.8% from 13.52p in 2025. The Board declared a second interim dividend of 9.5p per share, bringing the full-year dividend to 14.00p, a 6.1% increase on the prior year. The announcement states that only 6.4% of investment income for the year derived from special dividends, reflecting a trend towards recurring income. The payment date is 27 November 2026, with a record date of 6 November 2026 and an ex-dividend date of 5 November 2026. The Company's ongoing charges ratio improved to 0.77% from 0.85%, following a management fee reduction implemented in April 2025.

Three-Year Standstill Agreement with Saba Capital and Board Changes Including New Director Steve Russell

Since the financial year end, the Company entered into a three-year standstill agreement with abrdn Fund Managers Limited and Saba Capital Management LP, effective from 3 August 2026, lasting until the earlier of the 2029 AGM or the date abrdn ceases as manager. The Company gave no monetary consideration to Saba in connection with the agreement. On board composition, Steve Russell joined as an independent non-executive Director from 1 April 2026, having previously served as Investment Director at Ruffer LLP. Tim Scholefield will retire at the AGM after more than nine years of service. Following completion of the Scheme, Manju Malhotra and Steve Russell are expected to join the JUGI board.