The merger will be implemented via a scheme of reconstruction. Dividends per share increased to 14p, and the ongoing charges ratio decreased to 0.77%.

Today the company reported a 4.1% fall in net asset value total return for the year ended 30 June, with a share price total return down 3.6%, underperforming its reference index which was 6.1% higher.

Total assets decreased by 31.9% to £271.9 million, and equity shareholders’ funds fell by 31.3% to £246.9m.

In a letter to shareholders, Ms Airey says: “Sentiment towards the UK economy has been negative for some time given the challenges it continues to face in terms of low GDP growth and high debt levels exacerbated by high interest rates.

“This shapes the outlook particularly for smaller UK companies which are more exposed to the domestic economy, including its high energy costs,  than larger more globally oriented companies.

“Given the tight fiscal constraints, there is great uncertainty over how the government will tackle the policies needed to stimulate growth in the imminent Budget.

“What is clear is that the valuations of these companies are at historic lows, and in many cases with yields as high as large companies. The attractions of the asset class are further evident from the string of bids we have seen for such companies over the past year.

“The board is confident that the asset class contains significant opportunities for investors and that its recent recommendation to combine your company into a larger, more cost-effective, investment trust managed by JP Morgan Funds offers shareholders an improved way to benefit from exposure to smaller UK companies over the period ahead.”