**Summary**
The Scottish Oriental Smaller Companies Trust PLC released its half-year report for the six months ending February 28, 2026, highlighting a challenging period with a net asset value (NAV) total return of -2.3%, underperforming the MSCI AC Asia ex Japan Small Cap Indexs 16.0% return. The share price also declined by 3.8%. Despite this, the trust maintained its focus on long-term capital growth by investing in smaller Asian companies, primarily with market capitalizations below US$5,000 million.
The Chairmans statement acknowledged the disappointing performance but reaffirmed confidence in the managers disciplined approach. The Board reviewed portfolio positioning and engaged with the manager to address underperformance. A Conditional Tender Offer (CTO) mechanism, introduced in 2021, may be triggered if the trust underperforms the benchmark over a five-year period ending August 2026.
The trust amended its investment policy to focus on companies with market capitalizations equal to or lower than the largest constituent of the MSCI AC Asia ex Japan Small Cap Index, removing previous restrictions. Management fees were revised, reducing the annual fee and eliminating the performance fee to align better with shareholders interests.
The Interim Management Report detailed the trusts investment strategy, emphasizing its focus on high-quality management teams, durable competitive advantages, and balance sheet strength. Despite recent challenges, the managers highlighted the long-term growth potential of Asian smaller companies, citing examples like Blue Star and Mobile World Investment.
Portfolio changes included reducing exposure to consumer businesses and adding positions in diverse industries across Asia, particularly in Korea, China, and India. New investments were made in companies like ASMPT, Impro Precision, Hansol Chemical, and Eugene Technology, leveraging opportunities in semiconductor, industrial, and technological sectors.
The trusts financial statements showed a decrease in net assets to £361.80 million, with a net asset value per share of 320.81p. The trust continued its share buyback program, repurchasing 2,340,848 shares, and maintained its commitment to shareholder engagement and board composition, appointing two new Non-Executive Directors.
In conclusion, while facing short-term challenges, the Scottish Oriental Smaller Companies Trust remains focused on its long-term investment strategy, adapting to market changes and seeking to capitalize on the growth potential of Asian smaller companies.
| Metric | 28 Feb 2026 | 31 Aug 2025 | Change |
|---|---|---|---|
| Net Asset Value per share (pence) | 320.81 | 331.72 | -3.3% |
| Shareholders' Funds (£ million) | 361.80 | 381.87 | -5.3% |
| Market Capitalisation (£ million) | 321.41 | 382.87 | -16.1% |
| Net Current Assets (£ million) | 25.56 | 4.54 | +463.0% |
| Non-Current Liabilities (£ million) | -30.47 | -32.29 | +5.6% |
| Total Assets less Liabilities (£ million) | 361.80 | 381.87 | -5.3% |
| Cash and Cash Equivalents (£ million) | 28.12 | 6.65 | +322.9% |
| Debt (Non-Current Liabilities) (£ million) | -30.47 | -32.29 | +5.6% |