Half-yearly Report

Aberforth Smaller Companies Trust plc

HALF YEARLY REPORT
For the Six Months ended 30 June 2012

Aberforth Smaller Companies Trust plc (ASCoT) invests only in small UK quoted
companies and is managed by Aberforth Partners LLP. All data throughout this
Half Yearly Report are to, or as at, 30 June 2012 as applicable, unless
otherwise stated.

The investment objective of ASCoT is to achieve a net asset value total return
(with dividends reinvested) greater than on the Numis Smaller Companies Index
(excluding Investment Companies) over the long term.

CHAIRMAN'S STATEMENT

For the six months to 30 June 2012, Aberforth Smaller Companies Trust plc
(ASCoT) achieved a net asset value total return of 13.0%, which compares with
a total return of 11.6% from your Company's investment benchmark, the Numis
Smaller Companies Index excluding Investment Companies (NSCI (XIC)), formerly
known as the RBS Hoare Govett Smaller Companies Index. Meanwhile, the larger
company oriented FTSE All-Share Index registered a total return of 3.3%. Over
the period, smaller companies thus delivered a return that was 8.3 percentage
points higher than on the FTSE All-Share, while ASCoT's NAV return exceeded
the FTSE All-Share by 9.7 percentage points. The NSCI (XIC) represents a
change in name only for your Company's investment benchmark. The data and
series continue to be provided by London Business School and represent an
unbroken series since 1955.

The Managers' Report provides greater insight into the influences that have
affected markets and your Company during the period. It has once again been a
volatile period for markets with events in the Eurozone continuing to cast a
shadow. Around the world, investors remain cautious, often favouring safer
havens, and this, together with the actions of central banks has driven some
government bond yields to their lowest levels for well over a hundred years.
Against such a global backdrop, it is encouraging that for your Company we
have seen a continuation of the recent trends of rising dividends and
gradually increasing merger and acquisition (M&A) activity, which has
frequently been referenced in our recent Annual and Interim Reports to
Shareholders.

For long term investors, dividends are a key contributor to overall returns,
while for the value investor that role is amplified. The dividend environment
continues to be favourable and is allowing your Board to pursue the Company's
progressive dividend policy with an 8.5% rise in the first interim dividend to
7.0p per Ordinary Share. The interim dividend will be paid on 23 August 2012.
For Shareholders participating in ASCoT's Dividend Re-Investment Plan, the
last date for submission of Forms of Election is 2 August 2012. With the
introduction of recent tax changes allowing investment companies to distribute
capital gains, Shareholders should be reassured that the increased dividend
has been delivered via the revenue account while also allowing an increase in
the "old fashioned" revenue reserves which now stand at 28.1p per share. Those
revenue reserves, while playing a minor role in your Company's longer term
dividend record, were utilised in the immediate aftermath of the global
financial crisis.

At the Annual General Meeting on 7 March 2012, all resolutions were passed,
including that which renewed the authority to buy-in up to 14.99% of ASCoT'S
Ordinary Shares. During the six months to 30 June 2012, 251,000 Ordinary
Shares were purchased under this authority for a total consideration of
£1,469,000 at an average discount of 17%. Your Board keeps under review the
circumstances under which the authority is utilised in relation to the overall
objective of seeking to manage the discount.

Based on the dual influences of rising dividends and M&A activity, last year's
Interim Report expressed cautious optimism, but this proved misplaced as the
second half of 2011 saw dysfunctional European credit markets re-emerge as the
central issue for investors. A re-run of last year cannot be ruled out, but
nor can it be taken as a given.

Uncertainty is always present and, while real economic challenges lie ahead,
the equity market's ability, eventually, to work through such periods is not
in question. Indeed, for investors with a long term horizon, a heightened
level of uncertainty can also represent an opportunity. Your Board fully
understands the Managers' portfolio positioning in favour of the smaller small
companies in the NSCI (XIC) universe. This provides valuation support with
the added benefit of balance sheet flexibility at the investee company level.

Your Board remains confident that the Managers' experience and consistency of
approach will benefit ASCoT over the long term.

Professor Paul Marsh
Chairman
18 July 2012
[e-mail]
    



MANAGERS' REPORT

Introduction

ASCoT performed well in absolute terms over its first half, with a 13.0% NAV
total return. This exceeded the NSCI (XIC)'s 11.6%, which was itself some way
ahead of the FTSE All-Share's 3.3%. These six month figures mask a volatile
period for equities. The first quarter was particularly strong: the NSCI
(XIC)'s 18.1% return was the sixth strongest quarterly performance in
Aberforth's 22 year history. The second quarter was rather different. In
stockmarket conditions reminiscent of the second half of 2011, the NSCI
(XIC)'s total return was -5.6%.

Such swings in sentiment have been a feature of financial markets since the
global financial crisis and recession. Associated with this "risk-on,
risk-off" behaviour have been higher correlations between asset classes: risk
assets such as equities and commodities have tended to move en masse as
allocations to supposedly safe government bonds are nudged higher or lower in
response to changes in confidence.

The overwhelming influences on confidence have been macro economic and
political. The most significant for two years now has been the turmoil within
the Eurozone. Entering 2012, it seemed that the Long Term Refinancing
Operation had succeeded at least in buying time for a lasting solution to be
found, whether that was to embrace Federalism with a banking union or to
manage an orderly exit for those no longer able to remain within the single
currency zone. However, financial markets have proved impatient, with Greece's
elections and Spain's troubled banking sector raising the stakes. Despite some
progress from yet another EU summit at the period end, the days of
"muddling-through", which have allowed Germany to enjoy its most competitive
currency for decades, appear numbered.

Developments elsewhere added to uncertainty. Entering 2012, economic data were
on an improving trend, particularly in the US. However, this was not
sustained, with weaker indicators in the US, China and the UK. Indeed, the UK
is back in technical recession, with consecutive quarters of contracting GDP
influenced by the problems of its major trading partner, the Eurozone.
Familiar themes characterise the domestic economy: austerity-driven government
sector retrenchment, households beset by pressure on real disposable incomes
and inclined to save rather than spend, and a robust corporate sector
continuing to operate in financial surplus.

The health of businesses is illustrated by results issued in the first half by
companies in your Managers' tracked universe, which accounts for 96% by value
of the NSCI (XIC). Aggregate revenues of companies reporting final results
rose by 5%, with operating profits up by 9%. Cumulative capital expenditure
was well ahead of depreciation, though this was driven by the very large
investment programmes of a small number of resources companies. In aggregate,
net debt was reduced again and balance sheets strengthened further.

Investment Performance

At the portfolio level, ASCoT's total return was 12.4% over the first half.
After expenses, average gearing of 10% enhanced this performance to produce
the NAV total return of 13.0%. The continued tactical deployment of gearing is
motivated by attractive valuations, which are described in greater detail
later in this report. The following table quantifies the impact of gearing on
ASCoT's performance relative to the NSCI (XIC).

The relative performance attributable to the portfolio of investments is
driven by your Managers' bottom-up investment process, with the principal
selection criteria being the sustainable profitability of the underlying
business and the valuation accorded to the business by the stockmarket. That
said, there are several themes inherent in the portfolio that have influenced
ASCoT's performance. These themes are explained in the following paragraphs.

Performance Attribution Analysis

For the six months ended 30 June 2012

                                                Basis Points
Stock selection }                                       (228)
Sector selection } Based on mid-prices                   306
                                                         ___
Attributable to the portfolio of investments              78
(after transaction costs of 18 basis points)
Movement in mid to bid price spread                        1
Cash/gearing                                             108
Purchase of Ordinary Shares                                5
Management fee                                           (44)
Other expenses                                            (4)
                                                         ___
Total attribution based on bid-prices                    144
                                                         ___
 
Note: 100 basis points = 1%. Total Attribution is the difference
between the total return of the NAV and the Benchmark Index (i.e. NAV =
13.01%; Benchmark Index = 11.57%; difference is 1.44% being 144 basis points).


Investment Style

There are signs that the headwinds confronting your Managers' value style are
becoming less severe, but growth stocks nevertheless managed to out-perform
value stocks by around 2% over the first half, according to data from Style
Research (an independent analysis firm). With doubts over general economic
growth, the relative ratings of growth companies have improved as their
prospects for secular profit progression have been rewarded. Concurrently, the
very low interest rates of recent years have favoured the growth style, since
a greater proportion of the worth of a growth stock is the discounted value of
its mid to long term profits. In this respect, small cap resources stocks,
which are generally cash consuming exploration businesses, may be considered
aligned with the growth style. These twin dynamics have resulted in the
largest recorded bull market over the last five years for small cap growth
stocks since 1955 and in exaggerated gaps between the valuations of growth and
value stocks that your Managers consider unsustainable.

Size

Of the total value of the NSCI (XIC), 78% is accounted for by the overlap with
the FTSE 250. In contrast, the portfolio has an exposure of just 51% to these
mid cap companies. The consequent over-weight positioning in "smaller small"
companies proved beneficial over the first half, which can be gauged by
comparing the performance of the FTSE 250, up by 11.0%, with that of the FTSE
SmallCap, up by 13.4%. However, this represents only the second instance of
"smaller small" out-performance in the ten six-month periods since 2007. Such
is the extremity of risk aversion and concern about illiquidity that
underlying business characteristics and prospects are being overlooked.
"Smaller small" companies are valued on wide discounts to the mid cap
constituents of the NSCI (XIC), a state of affairs that allows your Managers
to buy smaller businesses with above average growth prospects - value
investors do not dislike growth, though they do dislike paying for it.

Overseas exposure

Last year's interim report noted that just over half the revenues of the
companies in the portfolio were generated outside the UK, which represented
rather more overseas exposure than is traditionally associated with small UK
companies. This analysis has been updated and extended to quantify exposure to
the Eurozone: of the revenues of the 90 companies in the portfolio at 30 June
2012, 48% came from the UK, 18% from the Eurozone, 15% from the Americas, and
19% from the rest of the world. Thus, while some Eurozone exposure is
unavoidable, it is not particularly high. It should be noted that a particular
geographical profile for the portfolio is not targeted; rather, the present
distribution is the result of accumulated decisions about individual
businesses. Moreover, this form of analysis risks over-simplifying what would
be a horrendously complicated turn of events should the Eurozone fragment. For
example, while the stockmarket has discounted - arguably over discounted - the
risks of exposure to Spain, it may not have grasped the implications of the
re-emergence of a Deutsche Mark bloc for those businesses that have thrived in
recent years on selling to Germany's extremely competitive export sector.

Strong Balance Sheets

Another demonstration of the peculiar behaviour of the stockmarket at present
regards balance sheet strength. While the valuations of very highly geared
companies within the NSCI (XIC) are penalised, there is little evidence that
companies at the other end of the balance sheet spectrum are rewarded. This
has allowed your Managers to tilt the portfolio towards companies with strong
balance sheets without compromising their value investment principles: 39% of
the portfolio is invested in companies with net cash, which compares with the
NSCI (XIC)'s 31%. Strong balance sheets offer flexibility to invest and
acquire, or, in the absence of such opportunities, to return surplus funds to
shareholders.

M&A

Despite a relapse into "risk-off" conditions in the second quarter, there was
a notable upsurge in M&A activity. While deals for seven NSCI (XIC)
constituents had been completed in the first half, another eight companies
were at some stage of takeover discussions at 30 June 2012. M&A activity is
still well down on the levels before the global financial crisis, but the
exciting aspect of recent deals has been the takeover premiums. Exit multiples
of EBITA have held up well and so premiums of 50-60% are now more common than
the traditional 30%. These high premiums reflect the low valuations currently
accorded to small companies by the stockmarket and the determination of fund
managers such as Aberforth to reject mooted takeovers at inappropriately low
valuations. ASCoT itself saw two deals completed for its holdings during the
first half, with another outstanding at the period end. On top of this direct
boost to performance, there has probably been an indirect benefit as the scale
of premiums has drawn attention to the opportunities within the asset class.

Income

The dividend experience through the first half has been positive, continuing
the recovery that began early in 2010. The following table classifies ASCoT's
90 holdings at 30 June by their most recent dividend action. The "Nil"
category contains those companies that do not currently pay dividends. Your
Managers consider that the majority of these will appear on the dividend
register within the next two years, at which point they will move into the
"New" category. At the current stage in the cycle, this phenomenon can have a
substantial effect on reported dividend growth across both the portfolio and
the NSCI (XIC).

Band                  Nil  IPOs Down  Flat +0-10% +10-20% + >20%  New
No. of holdings        15   1    10    8     27     14      10     5

Helped by this dividend experience, the portfolio and, by extension, ASCoT
itself continue to offer attractive income characteristics. The historic yield
of the portfolio at the end of June was 3.4%, with 14% of the portfolio still
nil yielding. This compares with the FTSE All-Share's 3.7%, the NSCI (XIC)'s
3.0% and a ten year gilt yield of 1.7%. With strong balance sheets, scope for
current nil yielders to return to the dividend register, and a historic
dividend cover well above its historic average, prospects for income growth
from the portfolio are realistic, notwithstanding the obvious macro economic
concerns. These portfolio characteristics are reflected in the 8.5% rise in
ASCoT's first interim dividend, which, together with the second interim
dividend paid in February, gave a trailing yield of 3.7% at the end of June.
This yield is underpinned not just by the well-diversified portfolio but also
by 28p of "old fashioned" revenue reserves.

Valuations

The following table sets out the historic PE ratios and yields of ASCoT's
portfolio and the NSCI (XIC). On both measures, the portfolio compares well.
Moreover, the valuations at the end of June also compared well with the long
term averages: since 1990, the average portfolio PE, yield and dividend cover
have been 12.8x, 3.4% and 2.5x respectively.

Characteristics              30 June 2012  31 December 2011   30 June 2011
                             ASCoT   NSCI    ASCoT     NSCI  ASCoT    NSCI
                                     (XIC)             (XIC)          (XIC)
Number of companies             90    413       92      422     92     417
Weighted average market      £425m  £806m    £391m    £676m  £433m   £780m
capitalisation
Price earnings ratio          9.8x  12.8x     9.0x    10.5x  10.8x   13.4x
(historic)
Dividend yield (historic)     3.4%   3.0%     3.4%     3.2%   2.9%    2.4%
Dividend cover (historic)     3.0x   2.6x     3.3x     3.0x   3.2x    3.1x

The principal valuation metric in your Managers' investment process is the
ratio of enterprise value to earnings before interest, tax and amortisation
(EV/EBITA). This is because, with cash yielding so little at the current time,
the PE ratio of a company is affected by the liability structure of its
balance sheet: other things being equal, a company with a high amount of net
debt will have a lower PE ratio than a company with net cash. The following
table demonstrates the progression of the EV/EBITA ratios of the portfolio and
the NSCI (XIC). This progression is influenced both by expectations of higher
profits and by a declining EV, as surplus cash is generated to reduce debt or
increase cash balances. This second dynamic typically accounts for around 20%
of the movement in the ratio from one year to the next. The portfolio's
valuation advantage over the small company universe is again evident.

EV/EBITA              Actual       Forecast       Forecast
                       2011          2012           2013
ASCoT portfolio        7.5x          7.1x           6.1x
Tracked NSCI (XIC)     9.6x          8.7x           7.6x

Outlook

There is plenty to worry about. The macro economic issues are obvious. But
logical analysis of these issues only gets you so far. Eventually politics and
national self-interest get in the way. Official policy in several major
economies has brought interest rates close to zero. This financial repression
complicates the appraisal of investments since it introduces extra doubt about
the appropriate discount rate. The reverse yield gap is a thing of the past,
with the yield premium of equities over gilts reinforced by regulatory shifts
in assets allocation. Prospects for equities often appear rooted in the short
term, with an obsession about whether the next quarterly statement will
precipitate upgrades or downgrades. Within the NSCI (XIC), "larger small"
companies are accorded exaggerated premiums against "smaller small" companies.
Related to this, growth companies enjoy historically high premiums over value
companies. Primary and secondary issuance has dwindled, with the resources
sectors dominating what little there has been. At the same time,
de-equitisation has continued to shrink the UK's stock of quoted equity
capital.

Notwithstanding all of the above and taking a step back from the short term
"risk-on, risk-off" noise, the small company universe offers abundant
investment opportunities. The businesses are run by boards with recent
experience of managing in a severe recession. Industrial exposures are very
different from the financials and resources heavy large cap world, and,
despite greater reliance on the UK than large caps, geographic diversification
is still available. Businesses are well funded, with balance sheets never so
strong in Aberforth's experience. And profit margins have recovered well over
the last two years, offering protection should trading conditions deteriorate.

However, a skittish stockmarket is reluctant to reflect these fundamental
strengths in valuations. The majority of small businesses are valued well
below their long term averages. A fortunate few - large growth companies -
have been able to break free but trade on exaggerated valuations compared with
most small companies. It is from this silent majority of the UK stockmarket
that ASCoT's portfolio is selected.

Looking at the value proposition in another way, small companies have
generated an average annual total return of 15.3% since 1955. Adjusted for
inflation, the return has been 9.1%, which compares with 5.8% from the wider
UK market. The components of the real return from small companies are an
average starting yield of 4.8%, real dividend growth of 2.1% and an annual
valuation change of 1.9%.

Moving on to the situation at the end of June, the average current year yield
from the portfolio's holdings was 3.6%. However, with above average dividend
cover and the likelihood of nil yielders starting to pay dividends again, near
term prospects for dividend growth are good: your Managers estimate 7.5% per
annum over the next two years, or, assuming a 3.0% inflation rate, 4.5% in
real terms. Clearly, extrapolation of such rates of growth into the medium and
long term is too ambitious, but your Managers believe that over time the value
investment style ought to be capable of generating incremental income growth
as holdings are re-rated and sold, with the proceeds reinvested in cheaper and
higher yielding companies. On top of this, with valuations for the asset class
below their long term average and with value stocks particularly cheap, it
might also be reasonable to expect some extra return from re-rating. Thus,
small UK quoted companies selected according to a value discipline offer a
medium to long term investment proposition that stacks up well in comparison
with history and, indeed, with other financial assets.

Aberforth Partners LLP
Managers
18 July 2012




INVESTMENT PORTFOLIO

Fifty Largest Investments as at 30 June 2012

                               Valuation  % of
No. Company                        £'000 Total Business Activity
1   RPC Group                     28,286   4.2 Plastic packaging
2   e2v technologies              25,034   3.8 Electronic components & subsystems
3   Galliford Try                 23,137   3.5 Housebuilding & construction services
4   JD Sports Fashion             20,740   3.1 Retailing - sports goods & clothing
5   CSR                           20,688   3.1 Location & connectivity chips for mobile devices
6   RPS Group                     19,081   2.9 Energy & environmental consulting
7   Bodycote                      19,026   2.8 Engineering - heat treatment
8   Micro Focus                   15,917   2.4 Software - development & testing
9   Phoenix IT Group              14,364   2.2 IT services & disaster recovery
10  Spirit Pub Company            14,012   2.1 Managed pub operator
    Top Ten Investments          200,285  30.1
11  Howden Joinery Group          13,909   2.1 Kitchen supplier
12  Low & Bonar                   13,462   2.0 Manufacture of industrial textiles
13  AZ Electronic Materials       12,858   1.9 Chemicals for semiconductor production
14  UMECO                         12,801   1.9 Advanced composite materials
15  Vectura Group                 12,740   1.9 Inhaled pharmaceuticals - respiratory specialism
16  St. Modwen Properties         12,662   1.9 Property investment & development
17  National Express Group        12,561   1.9 Train, bus & coach operator
18  Northgate                     12,539   1.9 Van rental
19  Tullett Prebon                12,244   1.9 Inter dealer broker
20  Anite                         12,149   1.8 Software - telecoms & travel
    Top Twenty Investments       328,210  49.3
21  Optos                         11,492   1.7 Medical technology - retinal imaging
22  Debenhams                     11,438   1.7 Department stores
23  Laird                         11,367   1.7 Electronic systems and controls
24  Lavendon Group                11,076   1.7 Hire of access equipment
25  Brewin Dolphin Holdings       11,011   1.6 Private client fund manager
26  Huntsworth                    10,698   1.6 Public relations
27  Castings                      10,655   1.6 Engineering - automotive castings
28  Barratt Developments          10,535   1.6 Housebuilding
29  Regus                         10,327   1.5 Serviced office accommodation
30  Morgan Crucible Company        9,712   1.5 Engineering - ceramic & carbon materials
    Top Thirty Investments       436,521  65.5
31  Beazley                        9,299   1.4 Lloyds insurer
32  WH Smith                       9,174   1.4 Newsagents
33  KCOM Group                     9,091   1.4 Telecommunications services
34  Workspace Group                8,633   1.3 Property - rental to small businesses
35  Microgen                       8,621   1.3 Workflow & financial services software
36  Unite Group                    8,209   1.2 Property - student accommodation
37  Cranswick                      8,103   1.2 Food manufacturer
38  Hansteen Holdings              7,886   1.2 Property - industrial
39  Centamin                       7,799   1.2 Gold miner
40  Yule Catto & Co                7,504   1.1 Speciality chemicals
    Top Forty Investments        520,840  78.2
41  Moneysupermarket.com Group     7,294   1.1 Price comparison websites
42  Safestore Holdings             7,251   1.1 Property - self storage
43  Hansard Global                 7,248   1.1 Life assurance savings products
44  4imprint Group                 7,047   1.1 Promotional products
45  F&C Asset Management           6,576   1.0 Investment manager
46  EnQuest                        6,343   0.9 Oil & gas exploration & production
47  Halfords Group                 6,152   0.9 Retailing & car servicing
48  JKX Oil & Gas                  6,136   0.9 Oil & gas exploration & production
49  Robert Walters                 6,125   0.9 Recruitment
50  Anglo Pacific Group            6,122   0.9 Natural resources royalties company
    Top Fifty Investments        587,134  88.1
    Other Investments (40)       137,823  20.7
    Total Investments            724,957 108.8
                                 _______ _____
    Net Liabilities              (58,835) (8.8)
                                 _______ _____
    Total Net Assets             666,122 100.0
  

INTERIM MANAGEMENT REPORT

Risks and Uncertainties

A review of the half year and the outlook for the Company can be found in the
Chairman's Statement and the Managers' Report. The Directors have established
an ongoing process for identifying, evaluating and managing the key risks
faced by the Company. The Board believes that the Company has a relatively low
risk profile in the context of the investment trust industry. This belief
arises from the fact that the Company has a simple capital structure; invests
only in small UK quoted companies; has never been exposed to derivatives and
does not presently intend any such exposure; and outsources all the main
operational activities to recognised, well established firms.

As the Company's investments consist of small UK quoted companies, the
principal risks facing the Company are market related and include market
price, interest rate, credit and liquidity risk. Additional risks faced by the
Company relate to investment objective, investment policy, share price
discount, regulatory, operational/financial risk and gearing risk. An
explanation of these risks and how they are managed can be found in the
Directors' Report contained within the 2011 Annual Report.

These principal risks and uncertainties have not changed from those disclosed
in the 2011 Annual Report.



DIRECTORS' RESPONSIBILITY STATEMENT

The Directors confirm that, to the best of their knowledge:

(i) the condensed set of financial statements has been prepared in accordance
with the Statement `Half-yearly financial reports' issued by the Financial Reporting 
Council; and

(ii) the half-yearly report includes a fair review of information required by:

(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication
of important events during the first six months of the year and their impact
on the financial statements together with a description of the principal risks
and uncertainties for the remaining six months of the year; and

(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being disclosure of
related party transactions and changes therein.

On behalf of the Board
Professor Paul Marsh
Chairman
18 July 2012





The Income Statement, Reconciliation of Movements in Shareholders' Funds,
Balance Sheet and the Cash Flow Statement are set out below:-

INCOME STATEMENT (unaudited)

For the six months ended 30 June 2012

                                               Revenue     Capital      Total
                                                 £ 000       £ 000      £ 000
 
Realised net losses on sales                         -    (37,221)   (37,221)
Movement in fair value                               -     104,931    104,931
                                               _______     _______    _______
Net gains on investments                             -      67,710     67,710
Dividend income                                 15,291           -     15,291
Other income                                         -           -          -
Investment management fee (Note 2)             (1,000)     (1,667)    (2,667)
Transaction costs                                    -     (1,083)    (1,083)
Other expenses                                   (228)           -      (228)
                                               _______     _______    _______
Net return before finance costs and tax         14,063      64,960     79,023
Finance costs                                    (284)       (473)      (757)
                                               _______     _______    _______
Net return on ordinary activities before tax    13,779      64,487     78,266
Tax on ordinary activities                        (18)           -       (18)
                                               _______     _______    _______
Return attributable to equity shareholders      13,761      64,487     78,248
                                               _______     _______    _______
 
Returns per Ordinary Share (Note 4)             14.34p      67.18p     81.52p


Dividends

On 18 July 2012, the Board declared a first interim dividend for
the year ending 31 December 2012 of 7.00p per Ordinary Share (2011 - 6.45p)
which will be paid on 23 August 2012.




INCOME STATEMENT (unaudited)
For the six months ended 30 June 2011

                                               Revenue     Capital      Total
                                                 £ 000       £ 000      £ 000
 
Realised net gains on sales                          -      53,206     53,206
Movement in fair value                               -    (10,947)   (10,947)
                                               _______     _______    _______
Net gains on investments                             -      42,259     42,259
Dividend income                                 14,125           -     14,125
Other income                                         -           -          -
Investment management fee (Note 2)             (1,086)     (1,810)    (2,896)
Transaction costs                                    -     (1,497)    (1,497)
Other expenses                                   (300)           -      (300)
                                               _______     _______    _______
Net return before finance costs and tax         12,739      38,952     51,691
Finance costs                                    (309)       (515)      (824)
                                               _______     _______    _______
Net return on ordinary activities before tax    12,430      38,437     50,867
Tax on ordinary activities                         (6)           -        (6)
                                               _______     _______    _______
Return attributable to equity shareholders      12,424      38,437     50,861
                                               _______     _______    _______
 
Returns per Ordinary Share (Note 4)             12.89p      39.89p     52.78p



INCOME STATEMENT(unaudited)
For the year ended 31 December 2011

                                               Revenue     Capital      Total
                                                 £ 000       £ 000      £ 000
 
Realised net gains on sales                          -      69,356     69,356
Movement in fair value                               -   (179,371)  (179,371)
                                               _______     _______    _______
Net losses on investments                            -   (110,015)  (110,015)
Dividend income                                 26,502           -     26,502
Other income                                         1           -          1
Investment management fee (Note 2)             (2,105)     (3,508)    (5,613)
Transaction costs                                    -     (2,475)    (2,475)
Other expenses                                   (522)           -      (522)
                                               _______     _______    _______
Net return before finance costs and tax         23,876   (115,998)   (92,122)
Finance costs                                    (616)     (1,027)    (1,643)
                                               _______     _______    _______
Net return on ordinary activities before tax    23,260   (117,025)   (93,765)
Tax on ordinary activities                        (13)           -       (13)
                                               _______     _______    _______
Return attributable to equity shareholders      23,247   (117,025)   (93,778)
                                               _______     _______    _______
Returns per Ordinary Share (Note 4)             24.13p   (121.46)p   (97.33)p



RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
(unaudited)

For the six months ended 30 June 2012
   
                                     Capital
                            Share Redemption  Special  Capital  Revenue
                          capital    reserve  reserve  reserve  reserve    Total
                            £ 000      £ 000    £ 000    £ 000    £ 000    £ 000
Balance as at 31
December 2011                 961         27  182,103  379,276   40,724  603,091
Return on ordinary  
activities                      -          -        -   64,487   13,761   78,248
after taxation
Equity dividends paid           -          -        -        - (13,748) (13,748)
Purchase of Ordinary Shares   (2)          2   (1,469)       -        -  (1,469)
                           _______    _______  _______ _______  _______  _______
Balance as at 30              959         29   180,634 443,763   40,737  666,122
June 2012
                           _______    _______  _______ _______  _______  _______


For the six months ended 30 June 2011

                                     Capital
                            Share Redemption  Special  Capital  Revenue                        
                          capital    reserve  reserve  reserve  reserve    Total
                            £ 000      £ 000    £ 000    £ 000    £ 000    £ 000
Balance as at 31
December 2010                 964         24  183,279  496,301   36,221  716,789
Return on ordinary
activities                      -          -        -   38,437   12,424   50,861
after taxation
Equity dividends paid           -          -        -        - (12,528) (12,528)
Purchase of Ordinary Shares     -          -        -        -        -        -
                           _______    _______ _______  _______  _______  _______
Balance as at 30 June         964         24  183,279  534,738   36,117  755,122
2011
                           _______    _______ _______  _______  _______  _______


For the year ended 31 December 2011

                                     Capital
                            Share Redemption  Special   Capital  Revenue
                          capital    reserve  reserve   reserve  reserve    Total
                            £ 000      £ 000    £ 000     £ 000    £ 000    £ 000
Balance as at 31  
December 2010                 964         24  183,279   496,301   36,221  716,789
Return on ordinary
activities                      -          -        - (117,025)   23,247 (93,778)
after taxation
Equity dividends paid           -          -        -         - (18,744) (18,744)
Purchase of Ordinary Shares   (3)          3  (1,176)         -        -  (1,176)
                           _______    _______ _______   _______  _______  _______
Balance as at 31   
December 2011                 961         27  182,103   379,276   40,724  603,091
                           _______    _______ _______   _______  _______  _______
    


BALANCE SHEET
(unaudited)
As at 30 June 2012
                                                        30 June 31 December   30 June
                                                           2012        2011      2011
                                                          £ 000       £ 000     £ 000
Fixed assets:
Investments at fair value through profit or loss        724,957     669,903   818,496
                                                        _______     _______   _______
Current assets
Amounts due from brokers                                  1,254           -     3,013
Other debtors                                             3,777       2,578     4,160
Cash at bank                                                 92         151     1,024
                                                        _______     _______   _______
                                                          5,123       2,729     8,197
                                                        _______     _______   _______
Creditors (amounts falling due within one year)
Amounts due to brokers                                  (3,988)     (1,137)   (1,571)
Other creditors                                           (310)       (520)     (142)
                                                        _______     _______   _______
                                                        (4,298)     (1,657)   (1,713)
                                                        _______     _______   _______
Net current assets                                          825       1,072     6,484
                                                        _______     _______   _______
Total assets less current liabilities                   725,782     670,975   824,980
Creditors (amounts falling due after more than one year)
Bank debt facility                                     (59,660)    (67,884)  (69,858)
                                                        _______     _______   _______
Total net assets                                        666,122     603,091   755,122
                                                        _______     _______   _______
 
Capital and reserves: equity interests
Called up share capital (Ordinary Shares)                   959         961       964
Reserves:
Capital redemption reserve                                   29          27        24
Special reserve                                         180,634     182,103   183,279
Capital reserve                                         443,763     379,276   534,738
Revenue reserve                                          40,737      40,724    36,117
                                                        _______     _______   _______
Total shareholders' funds                               666,122     603,091   755,122
                                                        _______     _______   _______

Net Asset Value per Share (Note 5)                      694.69p     627.31p   783.59p
 
Share Price                                             579.50p     501.00p   685.50p
CASH FLOW STATEMENT

(unaudited)

For the six months ended 30 June 2011

                                                    Six months     Six months     Year ended
                                                         ended          ended    31 December
                                                  30 June 2012   30 June 2011           2011
                                                         £ 000          £ 000          £ 000
 
Net cash inflow from operating activities               11,150          7,866         18,763
 
Taxation
Taxation recovered/(paid)                                    9           (11)           (15)
 
Returns on investments and servicing of finance          (742)          (777)        (1,584)
 
Capital expenditure and financial investment
Payments to acquire investments                      (100,346)      (145,979)      (238,064)
Receipts from sales of investments                     113,516        134,135        224,277
                                                       _______        _______        _______
Net cash inflow/(outflow) from capital
expenditure and financial investment                    13,170       (11,844)       (13,787)
                                                       _______        _______        _______
                                                        23,587        (4,766)          3,377
Equity dividends paid                                 (13,748)       (12,528)       (18,744)
                                                       _______        _______        _______
                                                         9,839       (17,294)       (15,367)
Financing
Purchase of Ordinary Shares                            (1,648)              -          (800)
 
Net (repayment)/drawdown of bank debt facilities
(before costs)                                         (8,250)         18,250         16,250
                                                       _______        _______        _______
Change in cash during the period                          (59)            956             83
                                                       _______        _______        _______
 
Reconciliation of net return before finance
costs and taxation to net cash inflow from
operating activities
Net return before finance costs and taxation            79,023         51,691       (92,122)
(Gains)/losses on investments                         (67,710)       (42,259)        110,015
Scrip dividends received                                     -              -          (137)
Transaction costs                                        1,083          1,497          2,475
Increase in debtors                                    (1,226)        (3,050)        (1,471)
(Decrease)/increase in creditors                          (20)           (13)              3
                                                       _______        _______        _______
Net cash inflow from operating activities               11,150          7,866         18,763
                                                       _______        _______        _______

NOTES TO THE FINANCIAL STATEMENTS

1. ACCOUNTING STANDARDS

The financial statements have been prepared on a going concern basis and in
accordance with UK generally accepted accounting practice ("UK GAAP") and the
AIC's Statement of Recommended Practice "Financial Statements of Investment
Trust Companies and Venture Capital Trusts" issued in 2009. The total column
of the Income Statement is the profit and loss account of the Company. All
revenue and capital items in the Income Statement are derived from continuing
operations. No operations were acquired or discontinued in the period.

The same accounting policies used for the year ended 31 December 2011 have
been applied.

2. INVESTMENT MANAGEMENT FEE

                                              Revenue      Capital       Total
                                                £ 000        £ 000       £ 000
For the six months ended 30 June 2012           1,000        1,667       2,667
                                                _____        _____       _____
For the six months ended 30 June 2011           1,086        1,810       2,896
                                                _____        _____       _____
For the year ended 31 December 2011             2,105        3,508       5,613
                                                _____        _____       _____
3. DIVIDENDS   

                                           Six months   Six months  Year ended
                                                ended        ended 31 December
Amounts recognised as distributions to   30 June 2012 30 June 2011        2011
equity holders in the period:                   £ 000        £ 000       £ 000
Second interim dividend of 13.0p for the            -       12,528      12,528
year ended 31 December 2010
First interim dividend of 6.45p for the             -            -       6,216
year ended 31 December 2011
Second interim dividend of 14.3p for the       13,748            -           -
year ended 31 December 2011
                                               ______       ______      ______
                                               13,748       12,528      18,744
                                               ______       ______      ______

The first interim dividend for the year ending 31 December 2012 of 7.00p (2011
- 6.45p) will be paid on 23 August 2012 to shareholders on the register on 3
August 2012. The ex-dividend date is 1 August 2012.

4. RETURNS PER ORDINARY SHARE

                                           Six months   Six months  Year ended
                                                ended        ended 31 December
The returns per Ordinary Share are       30 June 2012 30 June 2011        2011
based on:                                       £ 000        £ 000       £ 000
 
Weighted average number of shares in
issue during the period                    95,992,743   96,366,792  96,345,381

5. NET ASSET VALUES

The net assets and the net asset value per share attributable to the Ordinary
Shares at each period end are calculated in accordance with their entitlements
in the Articles of Association and were as follows:

                                         30 June 2012 31 December 30 June 2011
                                                £ 000        2011        £ 000
                                                            £ 000
Net assets attributable                       666,122     603,091      755,122
 
                                                Pence       Pence        Pence
Net asset value attributable per               694.69      627.31       783.59
Ordinary Share

As at 30 June 2012, the Company had 95,887,792 Ordinary Shares in issue (31
December 2011 - 96,138,792 and 30 June 2011 - 96,366,792).

6. FURTHER INFORMATION

The foregoing do not constitute statutory accounts (as defined in section
434(3) of the Companies Act 2006) of the Company. The statutory accounts for
the year ended 31 December 2011, which contained an unqualified Report of the
Auditors, have been lodged with the Registrar of Companies and did not contain
a statement required under section 498(2) or (3) of the Companies Act 2006.
All information shown for the six months ended 30 June 2012 is unaudited.

Certain statements in this announcement are forward looking
statements. By their nature, forward looking statements involve a number of
risks, uncertainties or assumptions that could cause actual results or events
to differ materially from those expressed or implied by those statements.
Forward looking statements regarding past trends or activities should not be
taken as representation that such trends or activities will continue in the
future. Accordingly, undue reliance should not be placed on forward looking
statements.

The Half Yearly Report is expected to be posted to shareholders on or before
23 July 2012. Members of the public may obtain copies from Aberforth Partners
LLP, 14 Melville Street, Edinburgh EH3 7NS or from its website at
www.aberforth.co.uk.

CONTACT:

David Ross/Alistair Whyte * Aberforth Partners LLP * 0131 220 0733
Aberforth Partners LLP, Secretaries - 18 July 2012