Half-year Financial Report

Montanaro UK Smaller Companies Investment Trust PLC (“MUSCIT” or the “Company”)

LEI: 213800UDDXXTXIF29P85

Half-Yearly Report for the six months to 30 September 2026

* Returns have been adjusted for dividends paid.

** The Benchmark is a composite index with the NSCI used since 1 April 2013. Sources: LSEG, Deutsche Numis, Montanaro Asset Management Limited.

Manager’s Review

The past six months rewarded investors who remained patient with UK SmallCap, despite a turbulent backdrop. Central banks raised interest rates, oil prices climbed above $100 a barrel amid renewed disruption around the Strait of Hormuz and the UK experienced another change of leadership following Sir Keir Starmer’s resignation as Prime Minister. Meanwhile, the ten-year gilt yield reached its highest level since 2007. Even so, smaller companies performed well, with the FTSE 250 returning 7.4% in the third quarter of 2026 alone. Quality growth, the style in which we invest, remained out of favour as higher yields weighed on its valuations.

Against a tricky backdrop, we are pleased to report that the Trust delivered a total return on NAV of +22.6%, compared with +19.3% for the benchmark. This was driven by stock selection rather than a friendly market: roughly two-thirds of the Portfolio’s risk is stock-specific, exactly what we aim for as bottom-up stock pickers.

XP Power recovered on a sharp rise in order intake. The Beauty Tech Group has more than doubled from the IPO price at which we invested last October, as consumers spend more on professional-grade beauty devices at home. Kainos upgraded profit expectations on record backlog. Not everything worked, however. Cerillion fell first on fears of AI disruption to software and later on a delay in booking orders, although we see this as a timing issue and its pipeline remains strong.

We welcomed six new holdings. Gooch & Housego and Avon Technologies both benefit from strong defence demand, the former alongside a recovering semiconductor market. Bioventix offers a growing Alzheimer’s diagnostic royalty stream; Sabre Insurance is a high-quality niche insurer; and more recently we added Anpario, a high-margin producer of natural animal feed additives. We also introduced Fonix, a capital-light, cash-generative mobile payments business.

We sold Workspace, due to low growth and interest rate sensitivity, along with Telecom Plus, Pinewood Technologies, Craneware and Elixirr on concerns about competition, regulation and the threat from AI. The Portfolio now holds 56 companies, within our target range of 55 to 60.

Takeover activity again underlined the value on offer. Animal Care received a bid at a 36% premium, Gooch & Housego was taken over within a quarter of our buying it and Gamma Communications agreed a recommended cash offer from Epiris valuing it at about £1 billion. Ashtead Technology has also been approached. Trade and private equity buyers are paying for earnings power that the public market is still reluctant to recognise.

The market is warming to SmallCap faster than it is warming to Quality. This gap is where we see the opportunity. The main risks are the cost of money and domestic politics. If gilt yields stay at current levels, businesses reliant on cheap financing will remain under pressure and the Budget could weigh on sentiment. The companies we own are better placed than most, with almost half holding net cash.

It is not often that we report a return of almost 23% over a six-month period. Please do not expect this as the new norm. However, it does show how patience can be rewarded. Valuations remain attractive and the earnings growth outlook looks strong. The portfolio is in good shape and companies appear generally upbeat, giving us every reason to be confident about the future.

Charles Montanaro and Adam Montanaro

Montanaro Asset Management Limited

12 November 2026

Investment Objective

MUSCIT’s investment objective is to achieve capital appreciation through investing in smaller quoted companies listed on the LSE or traded on the Alternative Investment Market (“AIM”) and to outperform its benchmark, the Deutsche Numis Smaller Companies Index (excluding investment companies) (“NSCI”).

No unquoted investments are permitted.

Investment Policy

The Company seeks to achieve its objective and to manage risk by investing in a diversified portfolio of quoted UK smaller companies. At the time of initial investment, a potential investee company must be profitable and no bigger than the largest constituent of the NSCI, which represents the smallest 10% of the UK stock market by value. At the start of 2026, this was any company below £2.51 billion in market capitalisation. The Manager focuses on the smaller end of this index.

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

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

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

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

All material changes to the policy will require shareholder and FCA approval.

Capital Structure

In the six months to 30 September 2026, the Company repurchased 4,043,365 Ordinary shares (representing 3.5 per cent. of the issued share capital, excluding treasury shares, as at 31 March 2026). The average discount over the period was 5.4%, reflecting the Board’s sustained efforts to maintain the discount within its single-digit target, and representing an improvement on the average discount of 8.4% recorded for the year to 31 March 2026. Since the period end a further 528,486 Ordinary shares have been repurchased and the discount currently stands at 5.8%.

As at 30 September 2026, the Company had 110,673,104 Ordinary shares of 2p each in issue, with a further 56,706,686 shares held in treasury. See note 6 for further details. At the date of this report 110,144,618 Ordinary shares of 2p each were in issue with a further 57,235,172 shares held in treasury. Holders of Ordinary shares have unrestricted voting rights of one vote per share at all general meetings of the Company.

Interim Management Report and Responsibility Statement

Interim Management Report

The important events that have occurred during the period under review and the key factors influencing the financial statements are set out in the Manager’s Review above.

Statement of Principal Risks and Uncertainties:

The principal risks facing the Company are unchanged since the date of the Annual Report and Accounts for the year ended 31 March 2026 and continue to be as set out in that report on pages 30 to 33 and in note 15 on pages 73 to 75. These include, but are not limited to, discount management, poor investment performance, risk oversight, gearing, key man risk, operational risk, cyber risk, administrator error, breach of regulation, financial, ESG, political and pandemics and other unforeseeable events. The principal financial risks include, but are not limited to, market risk, market price risk, foreign currency risk, interest rate risk, liquidity risk, credit risk and gearing levels. The Company’s principal risks and uncertainties have not changed materially since the date of that report and are not expected to change materially for the remaining six months of the Company’s financial year.

Related party transactions:

Related party transactions are disclosed in note 9 below. There have been no material changes in the related party transactions described in the last Annual Report.

Going concern:

As stated in note 7 below, the Directors are satisfied that the Company has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing the condensed financial statements.

Responsibility Statement

The Directors confirm that to the best of their knowledge:

This Half-Yearly Report was approved by the Board and the above Responsibility Statement was signed on its behalf by:

Arthur Copple

Chairman

12 November 2026

Condensed Income Statement (unaudited)

for the six months to 30 September 2026

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

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

There are no items of other comprehensive income and therefore the net return after taxation is also the total comprehensive income for the period.

No operations were acquired or discontinued in the period.

* These reserves are distributable, excluding any unrealised capital reserve.

Notes to the Financial Statements

As at 30 September 2026

1 Financial Information

The condensed financial statements for the six months ended 30 September 2026 comprise the statements together with the related notes. The Company has adopted FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ in its annual financial statements and the AIC SORP issued in November 2014 and updated in December 2025. The condensed financial statements for the six months to 30 September 2026 have been prepared in accordance with FRS 104 Interim Financial Reporting. The financial statements have been prepared on the basis of the same accounting policies as set out in the Company’s Annual Report and Accounts for the year ended 31 March 2026.

Following the adoption of FRS 102, the Company elected not to present the statement of cash flows per Section 7.1.A.

The financial information contained in this Half-Yearly Report does not constitute full statutory accounts as defined in section 434 of the Companies Act 2006. The financial information for the six months to 30 September 2026 and 30 September 2025 has not been audited or reviewed by the Company’s Auditor pursuant to the ISRE (UK) 2410 on such reviews.

The information for the year ended 31 March 2026 has been extracted from the latest published Annual Report and Accounts, which have been filed with the Registrar of Companies. The Report of the Auditors on those financial statements was unqualified and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

2 Management Expenses and Finance Costs

Management fees and finance costs are allocated 75% to the capital reserve and 25% to the revenue account. All other expenses are allocated in full to the revenue account on an accruals basis.

3 Tax Credit/Charge on Ordinary Activities

The tax charge for the six months to 30 September 2026 comprises irrecoverable withholding tax suffered of £nil (six months to 30 September 2025: £nil; year to 31 March 2026: £nil).

The corporation tax charge is based on an estimated effective tax rate of 0% as investment gains are exempt from tax owing to the Company’s status as an investment trust and there is expected to be an excess of management expenses over taxable income.

4 Dividends

The quarters referred to in the table above relate to the Company’s financial year, which ends on 31 March.

5 Fair Value Hierarchy

For investments actively traded in organised financial markets, fair value is generally determined by reference to quoted market bid prices or closing prices for SETS (LSE’s electronic trading service) stocks sourced from the LSE on the balance sheet date, without adjustment for transaction costs necessary to realise the asset.

In accordance with FRS 102, the Company must disclose the fair value hierarchy of financial instruments. The fair value hierarchy consists of the following three levels:

The table below sets out fair value measurements of financial assets in accordance with the FRS 102 fair value hierarchy system:

There were no level 2 or 3 investments held during the period.

6 Share Capital

7 Going Concern

The Company has adequate financial resources to meet its investment commitments and its day to day working capital requirements, and consequently, the Directors believe that the Company is well placed to manage its business risks. After making appropriate enquiries and due consideration of the Company’s cash balances, the liquidity of the Company’s investment portfolio and the cost base of the Company, the Directors have a reasonable expectation that the Company has adequate available financial resources to continue in operational existence for the foreseeable future and accordingly have concluded that it is appropriate to continue to adopt the going concern basis in preparing the Half-Yearly Report, consistent with previous years.

8 Segmental Reporting

The Company has one reportable segment, being investing primarily in a portfolio of quoted UK small companies.

9 Related Party Transactions

Under the UK Listing Rules, the Manager is regarded as a related party, and deemed to be Key Management Personnel of the Company. The relationship between the Company, its Directors and the Manager is disclosed in the Directors’ Report in the Annual Report and Accounts for the year ended 31 March 2026.

The amount charged by the Manager during the period was £344,000 (six months to 30 September 2025: £395,000; year to 31 March 2026: £731,000). At 30 September 2026, the amount due to the Manager, included in creditors, was £174,000. The management fee is 0.50% per annum of the net assets of the Company, plus £50,000 per annum in respect of acting as the AIFM.

Directors’ Emoluments

At 30 September 2026, the Board consisted of four Non-Executive Directors. All Directors are considered to be independent of the Manager. None of the Directors has a service contract with the Company. The Chairman receives an annual fee of £40,500, the Chair of the Audit and Management Engagement Committee receives an annual fee of £32,500 and all other Non-Executive Directors receive £28,000 per annum.

At 30 September 2026, the amount outstanding in respect of Directors’ fees was £nil (31 March 2026:

£nil).

At 30 September 2026, the interests of the Directors in the Ordinary shares of the Company were as follows:

Montanaro UK Smaller Companies Investment Trust PLC Registered in England and Wales No. 3004101

An investment company as defined under section 833 of the Companies Act 2006

Directors

Arthur Copple (Chairman)

Barbara Powley (Chair of the Audit & Management Engagement Committee and Senior Independent Director)

Catriona Hoare

Yuuichiro Nakajima (Chair of the Nomination & Remuneration Committee)

Principal Advisers

Sources of Further Information

Information on the Company, including this Half-Yearly Report is available on the Company’s website: https://montanaro.co.uk/trust/montanaro-uk-smaller-companies-investment-trust/

Key Dates

Frequency of NAV Publication

The Company’s NAV is released to the LSE on a daily basis.

ISA Status

The Company’s shares are fully eligible for inclusion in ISAs.

AIC

The Company is a member of the Association of Investment Companies (“AIC”).

NMPI Status

The Company currently conducts its affairs so that the shares it issues can be recommended by financial advisers to retail investors in accordance with the FCA’s rules in relation to non-mainstream investment products. It is intended to continue to do so for the foreseeable future. The Company’s securities are excluded from the FCA’s restrictions which apply to non-mainstream investment products because they are securities in a UK listed investment trust.

Registrar enquiries

The register for the Ordinary Shares is maintained by MUFG Corporate Markets. In the event of queries regarding your holding, please contact the registrar. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. Lines are open between 09:00 - 17:30, Monday to Friday excluding public holidays in England and Wales or alternatively at [email protected].

Changes of name must be notified in writing to the registrar, whose address is: MUFG Corporate Markets, Central Square, 29 Wellington Street, Leeds LS1 4DL. A change of address can be updated online via www.signalshares.com.

Warning to Shareholders – Beware of Share Fraud

Fraudsters use persuasive and high-pressure tactics to lure investors into scams. They may offer to sell shares that turn out to be worthless, or to buy shares at an inflated price in return for an upfront payment. Investment scams are often sophisticated and difficult to spot.

How to avoid investment scams:

• Reject unexpected offers: Scammers usually cold call, but contact can also come by email, post, word of mouth or at a seminar. If you’ve been offered an investment out of the blue, chances are it’s a high risk investment or a scam.

• Check the FCA Warning List: Use the FCA Warning List to check the risks of a potential investment – you can also search to see if the firm is known to be operating without FCA authorisation.

• Get impartial advice: Get impartial advice before investing – don’t use an adviser from the firm that contacted you.

You can report a firm or scam to the Financial Conduct Authority on 0800 111 6768 or through www.fca.org.uk/scamsmart

If you have lost money in a scam, contact Action Fraud on 0300 123 2040 or www.actionfraud.police.uk

Neither the contents of the Company’s website nor the contents of any website accessible from hyperlinks on this announcement (or any other website) is incorporated into, or forms part of, this announcement.

For further information, please contact: Montanaro Asset Management Limited Tel: 020 7448 8600

[email protected]