MONTANARO EUROPEAN SMALLER COMPANIES TRUST PLC
LEI: 213800CWSC5B8BG3RS21
UNAUDITED INTERIM REPORT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2019
The Board of Montanaro European Smaller Companies Trust plc (the "Company") announces the unaudited interim results of the Company for the six months ended 30 September 2019.
Highlights (unaudited)
for the six months ended 30 September 2019
Performance
Capital Returns%(2) |
6 Month |
1 year |
3 year |
5 year |
10 year |
MAM* |
Ordinary share price |
14.9 |
6.0 |
64.2 |
115.8 |
210.8 |
217.5 |
Net Asset Value ('NAV')** |
8.2 |
3.4 |
43.8 |
109.2 |
194.4 |
218.0 |
Benchmark (Composite)(1)** |
4.7 |
-5.0 |
18.8 |
64.4 |
119.2 |
125.3 |
Total Returns%(2) |
6 Month |
1 year |
3 year |
5 year |
10 year |
MAM* |
Ordinary share price |
15.7 |
6.9 |
69.2 |
128.7 |
252.3 |
281.8 |
NAV** |
8.3 |
4.0 |
47.3 |
119.8 |
228.9 |
269.4 |
Benchmark (Composite)(1)** |
6.5 |
-3.1 |
25.7 |
80.1 |
164.1 |
190.0 |
Sources: Morningstar Direct, Association of Investment Companies ('AIC'), MAM.
|
As at 30 September 2019 |
As at 30 September 2018 |
12 month % change |
As at 31 March 2019 (Audited) |
6 month % change |
Ordinary share price |
1,022.5p |
965.0p |
6.0 |
890.0p |
14.9 |
NAV per Ordinary share** |
1,094.1p |
1,058.6p |
3.4 |
1,010.8p |
8.2 |
Discount to NAV(2) |
6.5% |
8.8% |
|
12.0% |
|
Gross assets** (£'000s) |
191,889 |
186,026 |
3.2 |
177,713 |
8.0 |
Net assets** (£'000s) |
183,079 |
177,139 |
3.4 |
169,141 |
8.2 |
Market capitalisation** (£'000s) |
171,098 |
161,476 |
6.0 |
148,926 |
14.9 |
Net gearing employed(2) |
0.7% |
0.3% |
|
0.7% |
|
|
6 months ended 30 September 2019 |
6 months ended 30 September 2018 |
12 month % change |
12 months ended 31 March 2019 (Audited) |
6 month % change |
Revenue return per Ordinary share |
11.7p |
9.1p |
28.6 |
9.6p |
21.9 |
Dividend per Ordinary share |
2.0p |
1.75p |
|
9.0p |
|
Ongoing charges (annualised)(2) |
1.2% |
1.2% |
|
1.2% |
|
Portfolio turnover (rolling twelve months)** |
16% |
15% |
|
10% |
|
* From 5 September 2006, when Montanaro Asset Management ('MAM') were appointed as Investment Manager.
** Details provided in the glossary page below
(1) From 5 September 2006, the benchmark as the MSCI Europe SmallCap Index. The benchmark was changed on 1 June 2009 to the MSCI Europe SmallCap (ex UK) Index (in sterling terms)
(2) Refer to Alternative Performance Measures below
Chairman's Statement
Performance
In the first six months of the fiscal year the net asset value of your company rose by 8.2% to 1,094.1p per share thus outperforming the Benchmark (MSCI Europe SmallCap (ex UK)) which rose by 4.7%. Shareholders also benefited from a narrowing of the discount from 12% to 6.5%. As a result, the share price of the Company rose by 14.9% during the period, providing a total return of 15.7%. You will notice that we have changed the "Highlights" page above to provide shareholders with a quick and easy summary of the performance (both capital and total return) and key metrics of your Company on a consistent basis, which we hope you will find useful.
Earnings and Dividends
Revenue earnings per share for the period were 11.7p (2018: 9.1p). The Board has declared an interim dividend of 2.0p per Ordinary Share payable on 3 January 2020 to shareholders on the register on 6 December 2019.
Borrowings
At the end of the period, the Company had gearing, net of cash, of 0.7% compared to 0.7% at 31 March 2019.
Outlook
The last six months have seen a further deterioration of global economic growth indicators alongside rising geopolitical tensions. No-one knows if this will continue and how Central Banks and Governments will react should it do so. Brexit remains a source of ongoing uncertainty. However, we are confident that your portfolio consists of some of the highest quality, growing companies in Europe. They continue to produce high returns on capital with solid balance sheets and good cash generation. The combination of resilient structural growth drivers and experienced management teams gives us confidence for the future. It is worth highlighting that, by focusing on such companies, Shareholders have received strong absolute and relative returns over several years despite typically lackluster global economic conditions.
It is particularly pleasing to note that as well as being 5 star rated by Morningstar your Company won the Citywire European Equities Investment Trust Award in October 2019. Congratulations go to the whole team at Montanaro.
R M CURLING
Chairman
20 November 2019
Condensed Statement of Comprehensive Income (unaudited)
for the six months ended 30 September 2019
|
|
Six months to 30 September 2019 |
Six months to 30 September 2018 |
Year to 31 March2019 (Audited) |
Notes |
Revenue Capital Total £'000 £'000 £'000 |
Revenue Capital Total £'000 £'000 £'000 |
Revenue Capital Total £'000 £'000 £'000 |
Gains on investments |
|
|
|
|
held at fair value |
|
- 13,742 13,742 |
- 26,539 26,539 |
- 19,215 19,215 |
Exchange gains |
|
- 15 15 |
- 34 34 |
- 67 67 |
|
|
- 13,757 13,757 |
- 26,573 26,573 |
- 19,282 19,282 |
Revenue |
|
|
|
|
Investment income |
3 |
2,799 - 2,799 |
2,363 - 2,363 |
3,082 - 3,082 |
Total income |
|
2,799 13,757 16,556 |
2,363 26,573 28,936 |
3,082 19,282 22,364 |
Expenditure |
|
|
|
|
Management expenses |
4 |
(279) (518) (797) |
(245) (454) (699) |
(481) (892) (1,373) |
Other expenses |
|
(308) - (308) |
(336) - (336) |
(676) - (676) |
Total expenditure |
|
(587) (518) (1,105) |
(581) (454) (1,035) |
(1,157) (892) (2,049) |
Profit before finance |
|
|
|
|
costs and tax |
|
2,212 13,239 15,451 |
1,782 26,119 27,901 |
1,925 18,390 20,315 |
Finance costs |
|
(23) (43) (66) |
(84) (155) (239) |
(105) (196) (301) |
Profit before tax |
|
2,189 13,196 15,385 |
1,698 25,964 27,662 |
1,820 18,194 20,014 |
Tax |
|
(234) - (234) |
(170) - (170) |
(227) - (227) |
Total comprehensive |
|
|
|
|
income |
|
1,955 13,196 15,151 |
1,528 25,964 27,492 |
1,593 18,194 19,787 |
Return per share |
5 |
11.7p 78.9p 90.5p |
9.1p 155.2p 164.3p |
9.6p 108.7p 118.2p |
The total column of this statement represents the Company's Income Statement and Statement of Comprehensive Income, prepared in accordance with International Financial Reporting Standards.
The supplementary revenue return and capital return columns are both prepared under guidance published by the AIC.
All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued during the period.
Condensed Balance Sheet (unaudited)
as at 30 September 2019
|
Notes |
As at 30 September 2019 £'000 |
As at 30 September 2018 £'000 |
As at 31 March 2019 (Audited) £'000 |
Non-current assets |
Investments held at fair value through profit and loss |
7 |
183,843 |
177,338 |
169,828 |
Current assets |
Trade and other receivables |
|
841 |
638 |
646 |
Cash and cash equivalents |
|
7,596 |
8,391 |
7,443 |
|
|
8,437 |
9,029 |
8,089 |
Total assets |
|
192,280 |
186,367 |
177,917 |
Current liabilities |
Trade and other payables |
|
(391) |
(341) |
(204) |
Interest-bearing bank loans |
8 |
- |
- |
- |
|
|
(391) |
(341) |
(204) |
Non-current liabilities |
Interest-bearing bank loans |
8 |
(8,810) |
(8,887) |
(8,572) |
Total liabilities |
|
(9,201) |
(9,228) |
(8,776) |
Net assets |
|
183,079 |
177,139 |
169,141 |
Capital and reserves |
Called-up share capital |
|
8,724 |
8,724 |
8,724 |
Share premium account |
|
5,283 |
5,283 |
5,283 |
Capital redemption reserve |
|
2,212 |
2,212 |
2,212 |
Capital reserve |
|
162,306 |
156,880 |
149,110 |
Revenue reserve |
|
4,554 |
4,040 |
3,812 |
Shareholders' funds |
|
183,079 |
177,139 |
169,141 |
NAV per share |
9 |
1,094.1p |
1,058.6p |
1,010.8p |
Condensed Statement of Changes in Equity (unaudited)
for the six months ended 30 September 2019
|
Share capital £'000 |
Share premium account £'000 |
Capital redemption reserve £'000 |
Capital reserve £'000 |
Revenue reserve £'000 |
Total £'000 |
Balance at 1 April 2019 |
8,724 |
5,283 |
2,212 |
149,110 |
3,812 |
169,141 |
Total comprehensive income |
- |
- |
- |
13,196 |
1,955 |
15,151 |
Dividends paid |
- |
- |
- |
- |
(1,213) |
(1,213) |
Balance at 30 September 2019 |
8,724 |
5,283 |
2,212 |
162,306 |
4,554 |
183,079 |
for the six months ended 30 September 2018 (unaudited)
|
Share capital £'000 |
Share premium account £'000 |
Capital redemption reserve £'000 |
Capital reserve £'000 |
Revenue reserve £'000 |
Total £'000 |
Balance at 1 April 2018 |
8,724 |
5,283 |
2,212 |
130,916 |
3,641 |
150,776 |
Total comprehensive income |
- |
- |
- |
25,964 |
1,528 |
27,492 |
Dividends paid |
- |
- |
- |
- |
(1,129) |
(1,129) |
Balance at 30 September 2018 |
8,724 |
5,283 |
2,212 |
156,880 |
4,040 |
177,139 |
for the year ended 31 March 2019 (Audited)
|
Share capital £'000 |
Share premium account £'000 |
Capital redemption reserve £'000 |
Capital reserve £'000 |
Revenue reserve £'000 |
Total £'000 |
Balance at 1 April 2018 |
8,724 |
5,283 |
2,212 |
130,916 |
3,641 |
150,776 |
Total comprehensive income |
- |
- |
- |
18,194 |
1,593 |
19,787 |
Dividends paid |
- |
- |
- |
- |
(1,422) |
(1,422) |
Balance at 31 March 2019 |
8,724 |
5,283 |
2,212 |
149,110 |
3,812 |
169,141 |
Condensed Statement of Cash Flows (unaudited)
for the six months ended 30 September 2019
|
Six months to 30 September 2019 £'000 |
Six months to 30 September 2018 £'000 |
Year to 31 March 2019 (Audited) £'000 |
Net cash inflow from operating activities |
1,148 |
2,185 |
1,877 |
Cash outflow from financing activities |
(1,264) |
(14,784) |
(15,1660) |
|
(116) |
(12,599) |
(13,289) |
Exchange gains |
269 |
416 |
158 |
Increase/(decrease) in cash and cash equivalents |
153 |
(12,183) |
(13,131) |
Reconciliation of profit before finance costs and tax to net cash inflow from operating activities |
Profit before finance costs and tax |
15,451 |
27,901 |
20,315 |
Gains on investments held at fair value |
(13,742) |
(26,539) |
(19,215) |
Exchange (gains) |
(15) |
(34) |
(67) |
Withholding tax |
(297) |
(232) |
(204) |
Purchases of investments |
(13,901) |
(22,550) |
(35,690) |
Sales of investments |
13,575 |
23,479 |
36,805 |
Changes in working capital and other non-cash items |
77 |
160 |
(67) |
Net cash inflow from operating activities |
1,148 |
2,185 |
1,877 |
Statement of Principal Risks and Uncertainties
Most of the principal risks that could threaten the Company's objective, strategy, future returns and solvency are market related and comparable to those of other investment trusts investing primarily in quoted securities. The principal risks faced by the Company are investment and strategic, gearing, financial, discount volatility, regulatory, operational and manager risks. These risks, and the way in which they are mitigated, are described in more detail under the heading Principal Risks and Uncertainties and Risk Mitigation within the Business Model and Strategy in the Company's Annual Report for the year ended 31 March 2019. 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.
Directors' Responsibility Statement
in respect of the Interim Report
We confirm that to the best of our knowledge:
• the condensed set of Financial statements has been prepared in accordance with
IAS 34 'Interim Financial Reporting' and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company;
• the Chairman's Statement (constituting the Interim Management Report) includes a fair review of the information required by the Disclosure Guidance and Transparency Rules ('DTR') 4.2.7R, being an indication of important events that have occurred during the first six months of the financial year and their impact on the financial statements;
• the Statement of Principal Risks and Uncertainties shown above is a fair review of the information required by DTR 4.2.7R; and
• the Chairman's Statement together with the condensed set of financial statements include a fair review of the information required by DTR 4.2.8R, being related party transactions that have taken place in the first six months of the financial year and that have materially affected the financial position or performance of the Company during the period, and any changes in the related party transactions described in the last Annual Report that could do so.
The Interim Report and Accounts were approved by the Board and the above responsibility statement was signed on its behalf by:
R M CURLING
Chairman
20 November 2019
Notes to the Accounts (unaudited)
1. The condensed unaudited financial statements have been prepared in accordance with International Financial Reporting Standard ('IFRS') IAS 34 'Interim Financial Reporting' and the accounting policies set out in the statutory accounts of the Company for the year ended 31 March 2019. The condensed financial statements do not include all of the information required for a complete set of IFRS financial statements and should be read in conjunction with the financial statements of the Company for the year ended 31 March 2019, which were prepared under full IFRS requirements, to the extent that they have been adopted by the European Union.
2. Earnings for the first six months should not be taken as a guide to the results for the full year.
3. Income for the period is derived from:
|
Six months to 30 September 2019 £'000 |
Six months to 30 September 2018 £'000 |
Year ended 31 March 2019 (Audited) £'000 |
Overseas dividend income |
2,799 |
2,363 |
3,082 |
4. Management expenses:
|
Six months to 30 September 2019 |
Six months to 30 September 2018 |
Year to 31 March 2019 (Audited) |
|
Revenue £'000 |
Capital £'000 |
Total £'000 |
Revenue £'000 |
Capital £'000 |
Total £'000 |
Revenue £'000 |
Capital £'000 |
Total £'000 |
Investment |
|
management fee |
270 |
502 |
772 |
236 |
438 |
674 |
463 |
860 |
1,323 |
AIFM fee |
9 |
16 |
25 |
9 |
16 |
25 |
18 |
32 |
50 |
|
279 |
518 |
797 |
245 |
454 |
699 |
481 |
892 |
1,373 |
| |
|
|
|
|
|
|
|
|
|
|
MAM receives an investment management fee of 0.9% per annum of the Company's market capitalisation (payable monthly in arrears).
MAM is also entitled to a fee of £50,000 per annum for acting as the Company's Alternative Investment Fund Manager ('AIFM').
5. Earnings per Ordinary Share is based on a weighted average of 16,733,260 Ordinary Shares in issue during the period (year ended 31 March 2019: 16,733,260 and six months ended 30 September 2018: 16,733,260), excluding those shares bought back and held in treasury.
6. The interim dividend relating to the year ending 31 March 2020 of 2.0p per Ordinary Share will be paid on 3 January 2020 to shareholders on the register on 6 December 2019. In accordance with IFRS, this dividend has not been recognised in these financial statements. The ex-dividend date for this payment is 5 December 2019.
A final dividend relating to the year ended 31 March 2019 of 7.25p per Ordinary Share was paid during the six months to 30 September 2019 and amounted to £1,213,161.
7. Investments at Fair Value Through Profit and Loss:
|
30 September 2019 £'000 |
30 September 2018 £'000 |
31 March 2019 £'000 (Audited) |
Opening book cost |
107,172 |
93,523 |
93,523 |
Holding gains |
62,656 |
58,205 |
58,205 |
Opening fair value |
169,828 |
151,728 |
151,728 |
Purchases at cost |
14,060 |
22,550 |
35,690 |
Sales - proceeds |
(13,787) |
(23,479) |
(36,805) |
- gains on sales |
4,789 |
9,683 |
14,764 |
Holding gains |
8,953 |
16,856 |
4,451 |
Closing fair value |
183,843 |
177,338 |
169,828 |
Closing book cost |
112,234 |
102,277 |
107,172 |
Holding gains |
71,609 |
75,061 |
62,656 |
Closing valuation |
183,843 |
177,338 |
169,828 |
8. Interest-Bearing Bank Loans:
|
30 September 2019 £'000 |
30 September 2018 £'000 |
31 March 2019 £'000 (Audited) |
Opening balance |
8,572 |
21,903 |
21,903 |
Loan repaid during the period |
- |
(13,413) |
(13,393) |
Amortisation of set-up costs |
5 |
15 |
45 |
Non-cash foreign currency movements |
233 |
382 |
17 |
|
8,810 |
8,887 |
8,572 |
The Company's fixed rate loan facilities totaling £25 million matured on 13 September 2018. The Company refinanced £10 million by entering into a five year secured loan at a fixed rate of 1.33% per annum with ING Bank N.V. ('ING'). This loan will mature on 13 September 2023. The Company's other fixed rate loan totaling £15 million was repaid. The Company has also entered into a five year secured revolving loan facility with ING, for £15 million which will also mature on 13 September 2023.
As at 30 September 2019, no amounts were drawn down under this facility.
Under the bank covenants relating to these facilities, the Company is to ensure that at all times the total borrowings of the Company do not exceed 40% of the Adjusted NAV (as defined in the facility agreements) and that the Adjusted NAV does not fall below
£45 million. The Company met all covenant conditions during the period.
The fair value of the fixed rate loans is show in note 10.
8. The NAV per Ordinary Share is based on 16,733,260 Ordinary Shares in issue at the end of the period (31 March 2019: 16,733,260 and 30 September 2018: 16,733,260), excluding those shares bought back and held in treasury. As at 30 September 2019, there were 715,000 Ordinary Shares held in treasury (31 March 2019: 715,000 and 30 September 2018: 715,000).
9. The Company held the following categories of financial instruments at the period end:
|
Level 1 £'000 |
Level 2 £'000 |
Level 3 £'000 |
Total £'000 |
30 September 2019 |
Investments |
183,843 |
- |
- |
183,843 |
Loans |
- |
(8,831) |
- |
(8,831) |
30 September 2018 |
Investments |
177,338 |
- |
- |
177,338 |
Loans |
- |
(8,883) |
- |
(8,883) |
31 March 2019 (Audited) |
Investments |
169,828 |
- |
- |
169,828 |
Loans |
- |
(8,596) |
- |
(8,596) |
The table above provides an analysis of financial instruments based on the fair value hierarchy described below and which reflects the reliability and significance of the information used to measure their fair value. The levels are determined by the lowest significant applicable input:
Level 1 reflects financial instruments quoted in an active market.
Level 2 reflects financial instruments whose fair value is evidenced by comparison with other observable current market transactions in the same instrument or based on a valuation technique whose variables include only observable market data.
Level 3 reflects financial instruments whose fair value is determined in whole or in part using a valuation technique based on assumptions that are not supported by prices from observable market transactions in the same instrument and not based on available observable market data.
There were no transfers between levels during the period ended 30 September 2019 (year ended 31 March 2019 and period ended 30 September 2018: None).
Listed investments held (see note 7) are valued at fair value through profit or loss. For listed securities this is either bid price or the last traded price depending on the convention of the exchange on which the investment is listed. The fair value of the loans is calculated using a discounted cash flow technique based on relevant current interest rates compared to their value as stated on the Balance Sheet at amortised cost of £8,810,000 (31 March 2019: £8,572,000 and 30 September 2018: £8,887,000). The fair value of all other financial assets and liabilities is represented by their carrying value in the Balance Sheet shown above.
Other aspects of the Company's financial risk management objectives and policies are consistent with those disclosed in the financial statements as at and for the year ended 31 March 2019.
10. Rates of exchange (to Sterling):
|
30 September 2019 £'000 |
30 September 2018 £'000 |
31 March 2019 £'000 (Audited) |
Danish Krone |
8.44 |
8.37 |
8.66 |
Euro |
1.13 |
1.12 |
1.16 |
Norwegian Krone |
11.19 |
10.62 |
11.22 |
Swedish Krona |
12.12 |
11.60 |
12.09 |
Swiss Franc |
1.23 |
1.27 |
1.30 |
11. The Board has considered the requirements of IFRS 8 'Operating Segments'. The Board is of the view that the Company is engaged in a single segment of business, of investing in European quoted smaller companies, and that therefore the Company has only a single operating segment. The Board of Directors, as a whole, has been identified as constituting the chief operating decision maker of the Company. The key measure of performance used by the Board to assess the Company's performance is the total return on the Company's net asset value, as calculated under IFRS, and therefore no reconciliation is required between the measure of profit or loss used by the Board and that contained in the financial statements.
12. Going Concern:
In assessing the going concern basis of accounting, the Directors have had regard to the guidance issued by the Financial Reporting Council and have undertaken a rigorous review of the Company's ability to continue as a going concern. They have considered the current cash position of the Company, the availability of the borrowing facilities to 13 September 2023, compliance with their covenants, the Company's other liabilities and forecast revenues. The Directors have also taken into account the Company's investment policy, which is subject to regular Board monitoring processes and is designed to ensure that the Company is invested mainly in liquid, listed securities. The Company retains title to all assets held by its custodian and has financial covenants, relating to its bank borrowings with which it complied during the period.
The Directors believe, in light of the controls and review processes noted above and bearing in mind the nature of the Company's business and assets and liabilities, that the Company has adequate resources to continue in operational existence for a period of at least twelve months from the date of approval of the accounts. For this reason, they continue to adopt the going concern basis in preparing the accounts.
13. These are not statutory accounts in terms of Section 434 of the Companies Act 2006 and have not been audited or reviewed by the Company's Auditor. The information for the year ended 31 March 2019 has been extracted from the latest published financial statements and which have been filed with the Registrar of Companies. The Auditor's report on those accounts was not qualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying the report and did not contain statements under section 498 (2) or (3) of the Companies Act 2006. No statutory accounts in respect of any period after 31 March 2019 have been reported on by the Company's Auditor or delivered to the Registrar of Companies.
Alternative Performance Measures ("APMs")
The Company uses the following APMs:
Capital Return - NAV and Share Price Returns
Capital returns measure the effect of any rise or fall in the share price or NAV, excluding any dividends paid. As at 30 September 2019, the 6 month NAV Capital Return was +8.2%, and the 6 month Ordinary share price Capital Return was +14.9%, as shown in the highlights page above.
Total Return - NAV and Share Price Returns
Total returns measure the effect of any rise or fall in the share price or NAV, plus dividends paid which are reinvested at the prevailing NAV or share price on the ex-dividend date. As at 30 September 2019, the 6 month NAV Total Return was +8.3%, and the 6 month Ordinary share price Total Return was +15.7, as shown in the highlights above.
Discount or Premium to NAV
If the share price of an Investment Trust is less than its NAV per share, the shares are trading at a discount. If the share price is greater than the Net Asset Value per share, the shares are trading at a premium.
As at 30 September 2019, the NAV per share was 1,094.1p and the share price was 1,022.5p. The discount is therefore calculated at 6.5% as shown in the highlights above.
Net gearing employed
Unlike open-ended investment companies, Investment Trusts have the ability to borrow to invest. This term is used to describe the level of borrowings that an Investment Trust has undertaken, and is stated as a percentage of shareholders' funds. The higher the level of borrowings, the higher the gearing ratio.
Net gearing is calculated as total debt, net of cash and cash equivalents, as a percentage of the total shareholders' funds.
As at 30 September 2019, interest bearing bank loans were (£8,810,000), cash and cash equivalents were £7,596,000 and net assets were £183,079,000. As at 30 September 2019, Gearing is therefore equal to 0.7% as shown in the highlights above. This is a change from the previous calculation basis and as such the comparative figures for September 2018 and March 2019 have been re-presented in the highlights above.
Ongoing charges (expressed as a percentage)
Ongoing charges are the Company's revenue and capital expenses (excluding finance costs and certain non-recurring items) expressed as a percentage of the average daily net assets of the Company during the period.
Ongoing charges calculation
|
|
Six months to 30 September 2019 £'000 |
Six months to 30 September 2018 £'000 |
31 March 2019 £'000 (Audited) |
Total expenditure |
|
1,105 |
1,035 |
2,049 |
Less negative interest |
|
(26) |
- |
(103) |
Less non-recurring costs |
|
- |
- |
- |
Total |
(a) |
1,079 |
1,035 |
1,946 |
Average daily net assets |
(b) |
184,753 |
166,944 |
164,541 |
Ongoing charges (c = a/b)* |
(c) |
1.2% |
1.2% |
1.2% |
* 30 September 2019 and 30 September 2018 figures annualised for comparison (c = (a/b) x 2).
Glossary of terms
AIFMD
Alternative Investment Fund Managers Directive. Issued by the European Parliament in 2012 and 2013, the Directive requires that all investment vehicles in the European Union, including Investment Trusts, must, with effect from 22 July 2014, appoint a Depositary and an AIFM. The Board of Directors of an Investment Trust, nevertheless, remains fully responsible for all aspects of the Company's strategy, operations and compliance with regulations.
AIC
The Association of Investment Companies is the trade body for Closed-end Investment Companies (www.theaic.co.uk).
Benchmark
This is a measure against which an Investment Trust's performance is compared. The benchmark of the Company is the MSCI Europe SmallCap (ex UK) Index (capital return in Sterling terms). The index averages the performance of a defined selection of companies listed in European smaller company stock markets and gives an indication of how those markets have performed in any period.
Closed-end Investment Company
A company, including an Investment Trust, with a fixed issued ordinary share capital which is traded on an exchange at a price not necessarily related to the NAV of the company and where shares can only be issued or bought back by the company in certain circumstances. This contrasts with an open-ended investment company, which has units not traded on an exchange but issued or bought back from investors at a price directly related to the NAV.
Custodian
A specialised Financial institution responsible for safeguarding, worldwide, the listed securities and certain cash assets of the Company, as well as the income arising therefrom, through provision of custodial, settlement and associated services. The Company's Custodian is The Bank of New York Mellon (International) Limited.
Depositary
Under AIFMD rules applying from 22 July 2014, the Company must appoint a Depositary, whose duties in respect of investments, cash and similar assets include: safekeeping; verification of ownership and valuation; and cash monitoring. The Depositary has strict liability for loss of any investments or other assets where it has safekeeping duties. The Depositary's oversight duties include, but are not limited to, oversight of share buybacks, dividend payments and adherence to investment limits. The Company's Depositary is The Bank of New York Mellon (International) Limited.
Dividend
The income from an investment. Some Investment Trusts pay dividends on a quarterly or monthly basis. Montanaro European Smaller Companies Trust plc currently pays dividends twice a year.
Gearing
Gearing is calculated as total liabilities less current assets divided by net assets.
Gross assets
Gross assets are calculated as total assets less current liabilities.
IFRS
International Financial Reporting Standards as adopted by the European Union.
Investment Manager
The Company's investment manager is Montanaro Asset Management Limited.
Investment Trust
A Closed-end Investment Company which satisfies the requirements of Section 1158 of the Corporation Tax Act 2010. Companies which meet these criteria are exempt from having to pay tax on the capital gains they realise from sales of the investments within their portfolios.
Leverage
As defined under the AIFMD rules, Leverage is any method by which the exposure of an AIF is increased through borrowing of cash or securities or leverage embedded in derivative positions. Leverage is broadly equivalent to Gearing, but is expressed as a ratio between the assets (excluding borrowings) and the net assets (after taking account of borrowings). Under the gross method, exposure represents the sum of the Company's positions after deduction of cash and cash equivalents, without taking account of any hedging or netting arrangements. Under the commitment method, exposure is calculated without the deduction of cash and cash equivalents and after certain hedging and netting positions are offset against each other.
Marked to Market
Accounting for the fair value of an asset or liability that can change over time and reflects its current market value rather than its book cost.
Market Capitalisation
The stock market value of a company as determined by multiplying the number of shares in issue, excluding those shares held in treasury, by the market price of the shares
NAV per Ordinary Share
This is calculated as the net assets of an Investment Trust divided by the number of shares in issue, excluding those shares held in treasury.
Net Assets (or Shareholders' Funds)
This is calculated as the value of the investments and other assets of an Investment Trust, plus cash and debtors, less borrowings and any other creditors. It represents the underlying value of an Investment Trust at a point in time.
Net Gearing
Net gearing is calculated as total debt, net of cash and cash equivalents, as a percentage of the total shareholders' funds.
Ordinary Shares
The main type of equity capital issued by conventional Investment Trusts. Shareholders are entitled to their share of both income, in the form of dividends paid by the Investment Trust, and any capital growth. Montanaro European Smaller Companies Trust plc has only Ordinary Shares in issue.
Portfolio Turnover
Calculated using the total purchases plus the sales proceeds divided by two as a percentage of the average total investments at fair value during the year.
Share Price
The value of a share at a point in time as quoted on a stock exchange. The shares of Montanaro European Smaller Companies Trust plc are quoted on the Main Market of the London Stock Exchange.
SORP
Statement of Recommended Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts" issued by the AIC.
Total Assets
This is calculated as the value of the investments and other assets of an Investment Trust, plus cash and debtors.
Corporate Information
Registered Office
16 Charlotte Square Edinburgh EH2 4DF
Registered in Scotland No. SC074677
An investment company as defined under Section 833 of the Companies Act 2006.
Directors
R M Curling (Chairman) C A Roxburgh
M R Somerset Webb
Investment Manager and Alternative Investment Fund
Manager ('AIFM') MONTANARO ASSET MANAGEMENT LIMITED
53 Threadneedle Street London EC2R 8AR
Tel: 020 7448 8600
Fax: 020 7448 8601
Email: [email protected] www.montanaro.co.uk
Administrator
LINK ALTERNATIVE FUND ADMINISTRATORS LIMITED
Beaufort House
51 New North Road Exeter EX4 4EP
Company Secretary
LINK COMPANY MATTERS LIMITED
65 Gresham Street London EC2V 7NQ Tel: 020 7954 9547
Registrar
EQUINITI LIMITED
Aspect House Spencer Road Lancing
West Sussex BN99 6DA
Registrar's Shareholder Helpline Tel: 0371 384 20300**
Registrar's Broker Helpline Tel: 0906 559 6025
** Lines are open 8.30am to 5.30pm, Monday to Friday, excluding public holidays in England and Wales.
Stockbroker
CENKOS SECURITIES PLC
6.7.8 Tokenhouse Yard London EC2R 7AS
Depositary
THE BANK OF NEW YORK MELLON (INTERNATIONAL) LIMITED
One Canada Square London E14 5ALCustodian
BANK OF NEW YORK MELLON SA/NV
One Canada Square London E14 5AL
Auditor
ERNST & YOUNG LLP
Atria One
144 Morrison Street Edinburgh EH3 8EX
Solicitor
DICKSON MINTO W.S.
16 Charlotte Square Edinburgh EH2 4DF
