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Half-year Report
RNS
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RNS Number : 9434F
Montanaro European Smaller C.TstPLC
20 November 2020
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Montanaro European Smaller Companies Trust Plc
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LEI: 213800CWSC5B8BG3RS21
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|
Unaudited Half-Yearly Report for the Six Months Ended 30 September 2020
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The Board of Montanaro European Smaller Companies Trust plc (the "Company") announces the unaudited half-yearly results of the Company for the six months ended 30 September 2020.
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Highlights
(unaudited)
for the six months ended 30 September 2020
Performance
|
CapitalReturns%(2)
|
6 Month
|
1 year
|
3 year
|
5 year
|
10 year
|
MAM*
|
|
Ordinary
share price
|
59.4
|
37.2
|
73.3
|
171.3
|
249.8
|
339.4
|
|
Net Asset Value('NAV')**
|
49.9
|
31.1
|
58.3
|
151.6
|
210.0
|
319.7
|
|
Benchmark(Composite)(1)**
|
33.4
|
8.2
|
4.6
|
65.8
|
125.6
|
146.6
|
|
Total
Returns%(2)
|
6 Month
|
1 year
|
3 year
|
5 year
|
10 year
|
MAM*
|
|
Ordinary
share price
|
60.2
|
38.8
|
77.8
|
185.4
|
294.2
|
424.5
|
|
NAV**
|
51.5
|
31.9
|
62.1
|
163.6
|
250.6
|
394.4
|
|
Benchmark(Composite)(1)**
|
34.9
|
9.7
|
10.3
|
81.2
|
171.3
|
221.8
|
Sources:
Morningstar Direct, Association of Investment Companies ('AIC'), Montanaro Asset Management.
|
|
Asat 30September
2020
|
As at 30 September
2019
|
12 month
% change
|
As at 31 March
2020
(Audited)
|
6 month
% change
|
|
Ordinary
share price
|
1,402.5p
|
1,022.5p
|
37.4%
|
880.0p
|
59.4%
|
|
NAV
per Ordinaryshare**
|
1,434.6p
|
1,094.1p
|
31.1%
|
956.9p
|
49.9%
|
|
DiscounttoNAV(2)
|
2.2%
|
6.5%
|
-
|
8.0%
|
-
|
|
Gross
assets**(£'000s)
|
249,140
|
191,889
|
29.8%
|
168,932
|
47.5%
|
|
Net assets**(£'000s)
|
240,068
|
183,079
|
31.1%
|
160,123
|
49.9%
|
|
Market capitalisation**(£'000s)
|
234,600
|
171,098
|
37.1%
|
147,253
|
59.4%
|
|
Netgearingemployed(2)
|
0.6%
|
0.7%
|
-
|
5.8%
|
-
|
|
|
6monthsended
30
S
eptember
2020
|
6monthsended
30
September
2019
|
12 month
% change
|
12 months ended
31 March 2020
(Audited)
|
6 month
% change
|
|
Revenue return per Ordinaryshare
|
2.5p
|
11.7p
|
-78.6%
|
11.9p
|
-79.1%
|
|
Dividend per Ordinaryshare
|
2.0p
|
2.0p
|
|
9.25p
|
|
|
Ongoingcharges(annualised)(2)
|
1.2%
|
1.2%
|
-
|
1.2%
|
|
|
Portfolio turnover (rolling twelve months)**
|
12%
|
16%
|
|
14%
|
|
|
*From 5 September 2006, when Montanaro Asset Management Limited ('MAM') was appointed as Investment Manager.
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**Details provided in the Glossary below
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|
(1)
From
5 September 2006, the benchmark was the MSCI Europe SmallCap Index. The benchmark was changed on 1 June 2009 to the MSCIEurope SmallCap (ex UK) Index (in sterling terms)
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(2)
Refer to Alternative Performance Measures below
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Chairman
'
s Statement
|
Performance
The first six months of the financial year has seen your company recover strongly from the Covid-19 related market meltdown. The net asset value of your company rose by 49.9% to 1,434.6p per share thus outperforming the Benchmark (MSCI Europe SmallCap (ex UK) index), which rose by 33.4%. Shareholders also benefited from a narrowing of the discount from 8% to 2%. As a result, the share price of the Company rose by 59.4% during the period, providing a total return of 60.2%. Another period of strong absolute and relative performance. This builds upon the outstanding medium and longer term performance record with your Trust being the best performing European Investment Trust over the 3 and 5 year time periods.
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Earnings and Dividends
In the 2020 Annual Report we highlighted that it was very likely that income from your investee companies would decline from the high levels seen in the previous year, given the global economic uncertainty brought about by the Covid-19 pandemic as well as the political pressure to limit such distributions in light of the government support schemes that were put in place. This has proved to be the case and revenue earnings per share for the period were 2.5p (2019: 11.7p).
Despite this reduction in income we remain confident in the long-term prospects of your investee companies. In addition, the Company sits on a substantial revenue reserve which is available for distribution and which the Board can use to smooth short-term income volatility. As such, the Board has declared an unchanged interim dividend of 2.0p per Ordinary Share (2019: 2.0p per share) payable on 4 January 2021 to shareholders on the register on 4 December 2020.
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Borrowings
At the end of the period, the Company had gearing, net of cash, of 0.6% compared to 5.8% at 31 March 2020.
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Treasury Shares
No shares were issued from treasury during the first six months of the financial year, however, in the weeks following the period end, the Company issued 215,000 shares from treasury
at a premium to the NAV per share, in accordance with its stated treasury shares policy which is disclosed on page 24 oftheCompany'sAnnualReportfortheyearended31March 2020.
At the time of writing, 500,000 shares remained in treasury.
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The Board
The Board consists solely of independent Non-Executive Directors with a good balance of skills, experience, diversity and knowledge of the Company and its business.
We are fortunate to have welcomed Gordon Neilly to the Board in September 2020. Gordon has a wealth of experience and expertise in investment management and he is already making an important contribution to Board discussions.
Following Gordon's appointment Merryn Somerset Webb will retire from the Board at the end of the calendar year having completed 9 years of service. I would like to thank Merryn for her outstanding contribution and commitment to the Board. We will miss her wise counsel.
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Outlook
If 2020 has taught us anything it should be the folly of making bold predictions about future events. But uncertainty, disruption, change and even crises bring opportunities as well as risks for long-term investors.
The Manager continues to select only the highest quality companies in Europe for inclusion in your portfolio. Their focus is on identifying the structural growth drivers that make it possible for these companies to be significantly larger than they are today over a period of years, as opposed to trying to take advantage of short-term fads. This approach has yielded a strong NAV performance not only in the year to date, but over several years and we believe it is an effective way to deliver attractive long-term returns irrespective of future global economic conditions.
We are pleased that the combination of the Manager's disciplined investment approach and the robust NAV performance is being recognised by the market, with the shares having mostly traded at a premium since the end of the interim period under review. We are pleased that the Trust won the Citywire 'Best European Equities Trust' Award in November 2020.
In spite of the strong rebound in markets there remains considerable uncertainty about the ongoing impact of the Covid-19 virus. In addition, it would be remiss not to highlight the extraordinary run that "growth" style investing (which your company follows) has had relative to "value" investing and that at some stage this may reverse. The Board believes that the risk of this is best mitigated by sticking to investing only in quality companies and having a long-term investment horizon.
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R M CURLING
Chairman
19 November
2020
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Portfolio Summary
Twenty Largest Holdings
As at 30 September 2020
|
Holding
|
Country
|
Value
£'000
|
% of investment portfolio
|
% of net assets
|
|
Sartorius Stedim
|
France
|
10,676
|
4.4%
|
4
.5%
|
|
Fortnox
|
Sweden
|
9,299
|
3.9%
|
3.9%
|
|
VZ Holding
|
Switzerland
|
7,759
|
3.2%
|
3.2%
|
|
Tecan
|
Switzerland
|
7,731
|
3.2%
|
3.2%
|
|
Thule
|
Sweden
|
7,669
|
3.2%
|
3.2%
|
|
Hypoport
|
Germany
|
7,281
|
3.0%
|
3.0%
|
|
Esker
|
France
|
7,265
|
3.0%
|
3.0%
|
|
Atoss
|
Germany
|
7,185
|
3.0%
|
3.0%
|
|
MIPS
|
Sweden
|
6,903
|
2.9%
|
2.9%
|
|
NCAB
|
Sweden
|
6,896
|
2.9%
|
2.9%
|
|
SimCorp
|
Denmark
|
6,639
|
2.8%
|
2.8%
|
|
Vitrolife
|
Sweden
|
6,341
|
2.6%
|
2.6%
|
|
IMCD
|
Netherlands
|
5,531
|
2.3%
|
2.3%
|
|
Belimo Holdings
|
Switzerland
|
5,406
|
2.2%
|
2.3%
|
|
Reply
|
Italy
|
5,351
|
2.2%
|
2.2%
|
|
Nolato
|
Sweden
|
5,260
|
2.2%
|
2.2%
|
|
Avanza
|
Sweden
|
5,059
|
2.1%
|
2.1%
|
|
Mensch Und Maschine
|
Germany
|
4,935
|
2.1%
|
2.1%
|
|
CTS Eventim
|
Germany
|
4,895
|
2.0%
|
2.0%
|
|
Rational
|
Germany
|
4,816
|
2.0%
|
2.0%
|
|
Twenty Largest Holdings
|
|
132,897
|
55.2%
|
55.4%
|
A full portfolio listing is available on request from the Manager.
Geographical Analysis
As at 30 September 2020
|
Country
|
% of investment portfolio
|
|
Sweden
|
26%
|
|
Germany
|
22%
|
|
Switzerland
|
11%
|
|
Italy
|
11%
|
|
France
|
9%
|
|
Norway
|
8%
|
|
Netherlands
|
5%
|
|
Denmark
|
5%
|
|
Spain
|
3%
|
|
Belgium
|
1%
|
Source: Montanaro Asset Management Limited
Sector Analysis
As at 30 September 2020
|
Sector
|
% of investment portfolio
|
|
Information Technology
|
31%
|
|
Healthcare
|
20%
|
|
Industrials
|
19%
|
|
Financials
|
11%
|
|
Consumer Discretionary
|
8%
|
|
Consumer Staples
|
5%
|
|
Communications
|
2%
|
|
Energy
|
1%
|
|
Materials
|
1%
|
|
Real Estate
|
1%
|
Source: Montanaro Asset Management Limited
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 Chairman's Statement above.
|
|
StatementofPrincipalRisksandUncertainties:
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, including the impact of the Covid-19 pandemic on the market and the Company's business operations, and the way in which they are mitigated, are described in more detail under the heading 'Principal and Emerging Risks and Uncertainties and Risk Mitigation' within the Business Model and Strategy section on pages 12 to 14 of the Company's Annual Report for the year ended 31 March 2020. 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. The Directors have ensured that all risks will be kept under review at every meeting as the implications of Covid-19 continue to emerge.
|
|
Related party transactions:
Related party transactions are disclosed in note 14 below. There have been no material changes in the related party transactions described in the last annual report.
|
|
Going concern:
As stated in Note 13 to the condensed financial statements, 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.
|
|
|
Directors'
Responsibility
Statement
in respect of the Half-Yearly Report
We
confirm
that
to
the
best of our knowledge:
|
•
|
the
condensed
set
of
f
inancial
statements
havebeenpreparedinaccordancewith IAS34'InterimFinancialReporting'andgiveatrueandfairviewoftheassets,liabilities, financialpositionandprofitorlossoftheCompany;
|
|
•
|
the
Interim
Management
Reportincludesafair reviewoftheinformationrequiredbytheDisclosureGuidanceandTransparencyRule ('DTR')4.2.7R,beinganindicationofimportanteventsthathaveoccurredduringthefirstsixmonthsofthefinancialyearandtheirimpactonthefinancialstatements;
|
|
•
|
the
Statement
of
Principal
Risks
and
UncertaintiesshownaboveisafairreviewoftheinformationrequiredbyDTR 4.2.7R; and
|
|
•
|
the
Chairman's
Statement,
together
with
the
condensed
set
of
financial
statements,
include
afairreviewoftheinformationrequiredbyDTR4.2.8R,beingrelatedpartytransactionsthathavetakenplaceinthefirstsixmonthsofthefinancialyearandthathavemateriallyaffectedthefinancialpositionorperformanceoftheCompanyduringthe period,andanychangesintherelatedpartytransactionsdescribedinthelastAnnualReportthatcoulddoso.
|
|
|
|
|
|
TheHalf-YearlyReportandAccountswereapprovedbytheBoardandtheaboveresponsibility statementwassignedonitsbehalfby:
|
|
|
|
|
|
R M CURLING
Chairman
|
|
|
19 November
2020
|
Condensed
Statement
of
Comprehensive
Income
(unaudited)
for the six months ended 30 September 2020
|
|
|
Six months
to 30 September 2020
|
Six months
to 30 September 2019
|
Year
to 31 March 2020
(Audited)
|
|
|
Notes
|
Revenue
£'000
|
Capital
£'000
|
Total
£'000
|
Revenue
£'000
|
Capital
£'000
|
Total
£'000
|
Revenue
£'000
|
Capital
£'000
|
Total
£'000
|
|
Gains (losses)
on
investments held
at
fair
value
|
|
-
|
81,738
|
81,738
|
-
|
13,742
|
13,742
|
-
|
(8,126)
|
(8,126)
|
|
Exchange
gains/(losses)
|
|
-
|
(337)
|
(337)
|
-
|
15
|
15
|
|
(211)
|
(211)
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
Investment
income
|
|
1,209
|
-
|
1,209
|
2,799
|
-
|
2,699
|
3,497
|
-
|
3,497
|
|
Total
income
|
|
1,209
|
81,401
|
82,610
|
2,799
|
13,757
|
|
3,497
|
(8,337)
|
(4,840)
|
|
Expenditure
|
|
|
|
|
|
|
|
|
|
|
|
Management
expenses
|
|
(335)
|
(622)
|
(957)
|
(279)
|
(518)
|
(797)
|
(564)
|
(1,047)
|
(1,611)
|
|
Other
expenses
|
|
(303)
|
-
|
(303)
|
(308)
|
-
|
(308)
|
(595)
|
-
|
(595)
|
|
Total
expenditure
|
|
(638)
|
(622)
|
(1,260)
|
(587)
|
(518)
|
(1,105)
|
(1,159)
|
(1,047)
|
(2,206)
|
|
Profit before
finance costs
and
tax
|
|
571
|
80,779
|
81,350
|
2,212
|
13,239
|
15,451
|
2,338
|
(9,384)
|
(7,046)
|
|
Finance
costs
|
|
(36)
|
(43)
|
(79)
|
(23)
|
(43)
|
(66)
|
(48)
|
(85)
|
(133)
|
|
Profit before
tax
|
|
535
|
80,736
|
81,271
|
2,189
|
13,196
|
15,385
|
2,290
|
(9,469)
|
(7,179)
|
|
Tax
|
|
(113)
|
-
|
(113)
|
(234)
|
-
|
(234)
|
(291)
|
-
|
(291)
|
|
Total
comprehensive
income
|
|
422
|
80,736
|
81,158
|
1,955
|
13,196
|
15,151
|
1,999
|
(9,469)
|
(7,470)
|
|
Return
per
share
|
|
2.5p
|
482.5p
|
485.0p
|
11.7p
|
78.9p
|
90.5p
|
11.9p
|
(56.6p)
|
(44.7p)
|
|
ThetotalcolumnofthisstatementrepresentstheCompany'sIncomeStatementand Statement of Comprehensive Income, prepared in accordancewithInternationalFinancial ReportingStandards.
|
|
|
|
Thesupplementaryrevenuereturnandcapitalreturncolumnsarebothpreparedunder guidancepublishedbytheAIC.
|
|
|
|
Allrevenueandcapitalitemsintheabovestatementderivefromcontinuingoperations.Nooperationswereacquiredordiscontinuedduringtheperiod.
|
Condensed
Balance
Sheet
(unaudited)
as at 30 September 2020
|
|
Notes
|
As at 30 September
2020
£'000
|
As at 30 September
2019
£'000
|
As at 31March2020
(Audited)
£'000
|
|
Non-current
assets
|
|
Investments
held
at
fair
value
through profit
and
loss
|
|
241,298
|
183,843
|
169,018
|
|
Current
assets
|
|
|
|
|
|
Trade
and
other
receivables
|
|
559
|
841
|
615
|
|
Cash
and
cash
equivalents
|
|
7,712
|
7,596
|
405
|
|
|
|
8,271
|
8,437
|
1,020
|
|
Total
assets
|
|
249,569
|
192,280
|
170,038
|
|
Current
liabilities
|
|
|
|
|
|
Trade
and
other
payables
|
|
(429)
|
(391)
|
(222)
|
|
Interest-bearing
bank
loans
|
|
-
|
-
|
(884)
|
|
|
|
(429)
|
(391)
|
(1,106)
|
|
Non-current
liabilities
|
|
|
|
|
|
Interest-bearing
bank
loans
|
|
(9,072)
|
(8,810)
|
(8,809)
|
|
Total
liabilities
|
|
(9,501)
|
(9,201)
|
(9,915)
|
|
Net
assets
|
|
240,068
|
183,079
|
160,123
|
|
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
|
|
220,377
|
162,306
|
139,641
|
|
Revenue
reserve
|
|
3,472
|
4,554
|
4,263
|
|
Shareholders'
funds
|
|
240,068
|
183,079
|
160,123
|
|
NAV
per
share
|
|
1,434.7p
|
1,094.1p
|
956.9p
|
Condensed
Statement
of
Changes
in
Equity
(unaudited)
for the six months ended 30 September 2020
|
|
Share
capital
£'000
|
Share
premium
account
£'000
|
Capital redemptionreserve
£'000
|
Capital reserve
£'000
|
Revenue reserve
£'000
|
Total
£'000
|
|
Balance
at
1April2020
|
8,724
|
5,283
|
2,212
|
139,641
|
4,263
|
160,123
|
|
Total
comprehensive
income
|
-
|
-
|
-
|
80,736
|
422
|
81,158
|
|
Dividends
paid
|
-
|
-
|
-
|
-
|
(1,213)
|
(1,213)
|
|
Balance
at
30
September
2020
|
8,724
|
5,283
|
2,212
|
220,377
|
3,472
|
240,068
|
for the six months ended 30 September 2019 (unaudited)
|
|
Share
capital
£'000
|
Share
premium
account
£'000
|
Capital redemptionreserve
£'000
|
Capital
reserve
£'000
|
Revenue reserve
£'000
|
Total
£'000
|
|
Balance
at
1April2019
|
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 year ended 31 March 2020 (Audited)
|
|
Share
c
apital
£'000
|
Share
premium
account
£'000
|
Capital redemptionreserve
£'000
|
Capital
Reserve
£'000
|
Revenue reserve
£'000
|
Total
£'000
|
|
Balance
at
1April2019
|
8,724
|
5,283
|
2,212
|
149,110
|
3,812
|
169,141
|
|
Total
comprehensive
income
|
-
|
-
|
-
|
(9,469)
|
1,999
|
(7,470)
|
|
Dividends
paid
|
|
|
|
|
(1,548)
|
(1,548)
|
|
Balance
at
31
March
2020
|
8,724
|
5,283
|
2,212
|
139,641
|
4,263
|
160,123
|
Condensed
Statement
of
Cash
Flows
(unaudited)
for the six months ended 30 September 2020
|
|
Six months to 30 September
2020
£'000
|
Six months to
30 September
2019
£'000
|
Year
to31 March 2020
(Audited)
£'000
|
|
Net
cash
inflow (outflow)
from
operating
activities
|
9,595
|
1,148
|
(6,259)
|
|
Cash
outflow
from
financing
activities
|
(2,168)
|
(1,264)
|
(835)
|
|
|
7,427
|
(116)
|
(7,094)
|
|
Exchange
gains
|
120
|
269
|
56
|
|
Increase/(decrease)
in
cash
and
cash
equivalents
|
7,307
|
153
|
(7,038)
|
|
|
|
|
|
|
Reconciliation
of
profit before
finance
costs and
tax
to
net
cash
inflow
from
operating
activities
|
|
|
|
|
|
|
|
|
|
Profit before
finance
costs
and
tax
|
81,350
|
15,451
|
(7,046)
|
|
Gains
on
investments
held
at
fair
value
|
(81,738)
|
(13,742)
|
8,126
|
|
Exchange
(gains)
|
337
|
(15)
|
211
|
|
Withholding
tax
|
(113)
|
(297)
|
(291)
|
|
Purchases
of
investments
|
(24,897)
|
(13,901)
|
(33,739)
|
|
Sales
of
investments
|
34,415
|
13,575
|
26,361
|
|
Changes
in
working
capital
and
other
non-cash
items
|
241
|
77
|
419
|
|
Net
cash
inflow
from
operating
activities
|
9,595
|
1,148
|
(6,259)
|
N
otes
to
the
Accounts
(unaudited
)
|
1.
|
Thecondensed unauditedfinancialstatementshavebeenpreparedinaccordancewith InternationalFinancialReportingStandard('IFRS')IAS34'InterimFinancialReporting'andtheaccountingpoliciessetoutinthestatutoryaccountsoftheCompanyfortheyearended31March2020.Thecondensedfinancialstatementsdonotincludeallof theinformationrequiredforacompletesetofIFRSfinancialstatementsandshouldbe readinconjunctionwiththefinancialstatementsoftheCompanyfortheyearended 31March2020,whichwerepreparedunderfullIFRSrequirements.
|
|
2.
|
Earnings
for
the
first
sixmonthsshouldnotbetakenasaguidetotheresultsforthe fullyear.
|
|
3.
|
Income
for
the
periodisderivedfrom:
|
|
|
Six months to
30 September 2020
£'000
|
Six months to
30 September 2019
£'000
|
Year
ended
31 March 2020 (Audited)
£'000
|
|
Overseas
dividend
income
|
1,200
|
2,799
|
3,472
|
|
Other Income
|
9
|
-
|
25
|
|
Total
|
1,209
|
2,799
|
3,497
|
|
|
Six months to
30 September 2020
£'000
|
Six months to
30 September 2019
£'000
|
Year
ended
31 March 2020 (Audited)
£'000
|
|
|
Revenue
£'000
|
Capital
£'000
|
Total
£'000
|
Revenue
£'000
|
Capital
£'000
|
Total
£'000
|
Revenue
£'000
|
Capital
£'000
|
Total
£'000
|
|
Investment management
fee
|
335
|
622
|
957
|
270
|
502
|
772
|
546
|
1,015
|
1,561
|
|
AIFM
fee
|
9
|
16
|
25
|
9
|
16
|
25
|
18
|
32
|
50
|
|
|
344
|
638
|
982
|
279
|
518
|
797
|
564
|
1,047
|
1,611
|
|
|
MAMreceivesaninvestmentmanagementfeeof0.9%perannumoftheCompany'smarketcapitalisation(payablemonthlyinarrears).
|
|
|
|
|
|
MAMisalsoentitledtoafeeof£50,000perannumforactingastheCompany's AlternativeInvestmentFundManager("AIFM").
|
|
|
|
|
5.
|
Earnings
perOrdinaryShareisbasedonaweightedaverageof16,733,260OrdinarySharesinissueduringtheperiod(yearended31March 2020: 16,733,260andsix monthsended30September 2019: 16,733,260),excludingthosesharesboughtbackandheldintreasury.
|
|
|
|
|
6.
|
Theinterimdividendrelatingtotheyearended31March2020of2.0pperOrdinary Sharewillbepaidon4January2021toshareholdersontheregisteron4December 2020.InaccordancewithIFRS,thisdividendhasnotbeenrecognisedinthesefinancial statements.Theex-dividenddateforthispaymentis3December2020.
|
|
|
|
|
|
Afinaldividendrelatingtotheyearended31March2020of7.25pperOrdinaryShare waspaidduringthesixmonthsto30September2020andamountedto£1,213,000.
|
|
|
|
|
7.
|
Investments
at
Fair
Value
Through
Profit
and
Loss:
|
|
|
30 September
2020
£'000
|
30 September
2019
£'000
|
31 March
2020
£'000
(Audited)
|
|
Opening
book
cost
|
121,712
|
107,172
|
107,172
|
|
Holding
gains
|
47,163
|
62,656
|
62,656
|
|
Opening
fair
value
|
168,875
|
169,828
|
169,828
|
|
Purchases
at
cost
|
24,897
|
14,060
|
33,739
|
|
Sales
- proceeds
|
(34,352)
|
(13,787)
|
(26,423)
|
|
-gainsonsales
|
14,248
|
4,789
|
7,224
|
|
Holding
gains (losses)
|
67,630
|
8,953
|
(15,350)
|
|
Closing
fair
value
|
241,298
|
183,843
|
169,018
|
|
Closing
book
cost
|
126,505
|
112,234
|
121,712
|
|
Holding
gains
|
114,793
|
71,609
|
47,306
|
|
Closing
valuation
|
241,298
|
183,843
|
169.018
|
|
8.
|
Interest-Bearing
BankLoans:
|
|
|
30 September
2020
£'000
|
30 September
2019
£'000
|
31 March
2020
£'000
(Audited)
|
|
Opening
balance
|
8,572
|
8,572
|
8,572
|
|
Amortisation
of
set-up
costs
|
5
|
5
|
10
|
|
Non-cash
foreign currency
movements
|
495
|
233
|
227
|
|
|
9,072
|
8,810
|
8,809
|
|
|
TheCompany'sfixedrateloanfacilitiestotaling
£
25
million
matured
on13September 2018.TheCompanyrefinanced
£
10
million
by
entering
into
afiveyearsecuredloanatafixedrateof 1.33% perannumwithINGBankN.V.('ING').Thisloanwillmatureon 13September2023.TheCompany'sotherfixedrateloantotaling
£
15
million
was
repaid.
TheCompanyhasalsoenteredintoafiveyearsecuredrevolvingloanfacility withING,for£15millionwhichwillalsomatureon13September2023.
|
|
|
|
|
|
Asat30September2020,noamountsweredrawndownunderthesefacilities.
|
|
|
|
|
|
Under
the
bank
covenants
relating
to
these
facilities,
the
Company
is
to
ensure
that
at all
times
the
total
borrowings
of
the
Company
donotexceed40%oftheAdjusted NAV (asdefinedinthefacilityagreements)andthattheAdjusted NAV doesnotfallbelow £45million.TheCompanymetallcovenantconditionsduringtheperiod. Thefairvalueofthefixedrateloansisshowinnote10.
|
|
|
|
|
9.
|
The NAV per Ordinary Share was based on 16,733,260 Ordinary Shares in issue at the end of the period (31 March 2020: 16,733,260 and 30 September 2019: 16,733,260), excluding those shares bought back and held in treasury. As at 30 September 2020, there were 715,000 Ordinary Shares held in treasury (31 March 2020: 715,000 and 30 September 2019: 715,000).
|
|
|
|
|
10.
|
TheCompanyheldthefollowingcategoriesoffinancialinstrumentsattheperiodend:
|
|
|
Level 1
£'000
|
Level 2
£'000
|
Level 3
£'000
|
Total
£'000
|
|
30
September
2020
|
|
|
|
|
|
Investments
|
241,298
|
-
|
-
|
241,298
|
|
Loans
|
|
(9,072)
|
|
(9,072)
|
|
30
September
2019
|
|
|
|
|
|
Investments
|
183,843
|
-
|
-
|
183,843
|
|
Loans
|
-
|
(8,810)
|
-
|
(8,831)
|
|
31
March
2020
(Audited)
|
|
|
|
|
|
Investments
|
169,018
|
-
|
-
|
169,018
|
|
Loans
|
-
|
(8,809)
|
-
|
(8,809)
|
|
|
Thetableaboveprovidesananalysisoffinancialinstrumentsbasedonthefairvalue hierarchydescribedbelowandwhichreflectsthereliabilityandsignificanceofthe informationusedtomeasuretheirfairvalue.Thelevelsaredeterminedbythelowestsignificantapplicableinput:
|
|
|
|
|
|
Level
1reflectsfinancialinstrumentsquotedinanactivemarket.
|
|
|
Level
2reflectsfinancialinstrumentswhosefairvalueisevidencedbycomparisonwith otherobservablecurrentmarkettransactionsinthesameinstrumentorbasedonavaluationtechniquewhosevariablesincludeonlyobservablemarketdata.
|
|
|
|
|
|
Level
3reflectsfinancialinstrumentswhosefairvalueisdeterminedinwholeorinpartusingavaluationtechniquebasedonassumptionsthatarenotsupportedbyprices fromobservablemarkettransactionsinthesameinstrumentandnotbasedonavailableobservablemarketdata.
|
|
|
|
|
|
Therewerenotransfersbetweenlevelsduringtheperiodended30September2020(yearended31March2020andperiodended30September 2019: None).
|
|
|
|
|
|
Listed
investments
held
(seenote7)arevaluedatfairvaluethroughprofitorloss.For listedsecuritiesthisiseitherbidpriceorthelasttradedpricedependingontheconventionoftheexchangeonwhichtheinvestmentislisted.ThefairvalueoftheloansiscalculatedusingadiscountedcashflowtechniquebasedonrelevantcurrentinterestratescomparedtotheirvalueasstatedontheBalanceSheetatamortisedcostof£9,072,000 (31March2020:£8,809,000and30September2019:£8,810,000).Thefair valueofallotherfinancialassetsandliabilitiesisrepresentedbytheircarryingvaluein theBalanceSheetshownabove.
|
|
|
|
|
|
Other
aspects
of
the
Company's
financial
risk
management
objectives
and
policies
are
consistent
with
those
disclosed
in
the
financial
statements,
asatandfortheyearended, 31March2020.
|
|
|
|
|
11.
|
Rates
of
exchange
(to
Sterling):
|
|
|
30 September
2020
£'000
|
30 September
2019
£'000
|
31 March
2020
£'000
(Audited)
|
|
Danish
Krone
|
8.20
|
8.44
|
8.44
|
|
Euro
|
1.10
|
1.13
|
1.13
|
|
Norwegian
Krone
|
12.10
|
11.19
|
13.02
|
|
Swedish
Krona
|
11.57
|
12.12
|
12.28
|
|
Swiss
Franc
|
1.19
|
1.23
|
1.20
|
|
12.
|
TheBoardhasconsideredtherequirementsofIFRS8'OperatingSegments'.TheBoardisoftheviewthattheCompanyisengagedinasinglesegmentofbusiness,of investinginEuropeanquotedsmallercompanies,andthatthereforetheCompanyhas onlyasingleoperatingsegment.TheBoardofDirectors,asawhole,hasbeenidentifiedasconstitutingthechiefoperatingdecisionmakeroftheCompany.ThekeymeasureofperformanceusedbytheBoardtoassesstheCompany'sperformanceisthetotalreturnontheCompany'snetassetvalue,ascalculatedunderIFRS,andthereforenoreconciliationisrequiredbetweenthemeasureofprofitorlossusedbythe Boardandthatcontainedinthefinancialstatements.
|
|
|
|
|
13.
|
Going
Concern:
In
assessing
the
going
concernbasisofaccounting,theDirectorshavehadregardto theguidanceissuedbytheFinancialReportingCouncilandhaveundertakenarigorous reviewoftheCompany'sabilitytocontinueasagoingconcern.TheyhaveconsideredthecurrentcashpositionoftheCompany,theavailabilityoftheborrowingfacilitiesto13September2023,compliancewiththeircovenants,theCompany'sotherliabilities andforecastrevenues.TheDirectorshavealsotakenintoaccounttheCompany'sinvestment policy,whichissubjecttoregularBoardmonitoringprocessesandis designedtoensurethattheCompanyisinvestedmainlyinliquid,listedsecurities.TheCompanyretainstitletoallassetsheldbyitscustodianandhasfinancialcovenants, relatingtoitsbankborrowingswithwhichitcompliedduringtheperiod.
|
|
|
|
|
|
TheDirectorsbelieve,inlightofthecontrolsandreviewprocessesnotedaboveandbearinginmindthenatureoftheCompany'sbusinessandassetsandliabilities,thatthe Companyhasadequateresourcestocontinueinoperationalexistenceforaperiodofat leasttwelvemonthsfromthedateofapprovaloftheaccounts.Forthisreason,theycontinuetoadoptthegoingconcernbasisinpreparingtheaccounts.
|
|
|
|
|
14.
|
Related Parties:
The following are considered related parties: the Board of Directors. The Directors of the Company received fees for their services and dividends from their shareholdings in the Company as outlined below.
|
|
|
|
|
|
The amount charged by the Manager during the period was £957,000 (six months to 30 September 2019: £797,000; year to 31 March 2020: £1,611,000). At 30 September 2020, the amount due to the Manager, included in creditors, was £356,000. The existence of an independent Board of Directors demonstrates that the Company is free to pursue its own financial and operating policies and therefore, under the AIC SORP, the Manager is not considered to be a related party.
|
|
|
|
|
|
Directors' Emoluments
At 30 September 2020, 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 £35,000, the Chair of the Audit Committee receives an annual fee of £30,000 and non-executive Directors receive £25,000 per annum.
|
|
|
|
|
|
At 30 September 2020, the amount outstanding in respect of Directors' fees was £nil (31 March 2020: £nil).
|
|
|
|
|
|
At 30 September 2020, the interests of the Directors in the ordinary shares of the Company were as follows:
|
|
|
|
|
|
|
As at 30 September 2020
No. of shares
|
As at 31 March 2020
No. of shares
|
|
|
R M Curling
|
10,000
|
10,000
|
|
|
G J Neilly*
|
4,895
|
N/A
|
|
|
C A Roxburgh**
|
6,421
|
6,182
|
|
|
M R Somerset Webb
|
4,114
|
4,095
|
|
|
|
|
|
|
|
*Mr Neilly was appointed to the Board on 21 September 2020, but has been a shareholder for many years.
|
|
|
** Includes 214 shares held by Ms Roxburgh's spouse.
|
|
|
|
|
|
There were no changes in the Directors' interests between 30 September 2020 and the date of this report
.
|
|
|
|
|
15.
|
These
are
not
statutory
accounts
in
terms
of
Section
434
of
the
Companies
Act
2006
and
have
not
beenauditedorreviewedbytheCompany'sAuditor.Theinformationfortheyearended31March2020hasbeenextractedfromthelatestpublishedfinancialstatementsandwhichhavebeenfiledwiththeRegistrarofCompanies.TheAuditor'sreportonthoseaccountswasnotqualified,didnotincludeareferencetoanymatterstowhichtheauditordrewattentionbywayofemphasiswithoutqualifyingthereportanddidnotcontainstatementsundersection498(2)or(3) oftheCompaniesAct2006.Nostatutoryaccountsinrespectofanyperiodafter31March2020havebeenreportedonbytheCompany'sAuditorordeliveredtothe Registrar ofCompanies.
|
|
|
|
|
16.
|
Post Balance Sheet events
|
|
|
Since 31 March 2020, the Company has issued 215,000 Ordinary Shares from treasury, owing to demand in the market. The total consideration for these issuances is £3,109,725. Following these issuances, as at 19 November 2020, the Company has 16,948,260 shares in issue (excluding the remaining 500,000 shares held in treasury).
|
Alternative
Performance
Measures
("APMs")
|
|
TheCompanyusesthefollowingAPMs:
|
|
Capital Return - NAV and Share Price Returns
Capital
returns
measure
the
effectofanyriseorfallinthesharepriceorNAV,excludingany dividendspaid.Asat30September2020,the6month NAV CapitalReturnwas49.9%,andthe6monthOrdinarysharepriceCapitalReturnwas59.4%,asshownintheHighlights above.
|
|
Total
Return - NAV and Share Price Returns
Total
returns
measure
the
effectofanyriseorfallinthesharepriceorNAV,plusdividends paidwhicharereinvestedattheprevailing NAV orsharepriceontheex-dividenddate.Asat 30September2020,the6month NAV Total Returnwas51.5%,andthe6monthOrdinaryshareprice Total Returnwas60.2%,asshowninthe Highlights above.
|
|
Discount or Premium to NAV
If
the
share
price
of
anInvestmentTrustislessthanits NAV pershare,thesharesaretradingatadiscount.IfthesharepriceisgreaterthantheNAVpershare,thesharesaretradingatapremium.
|
|
Asat30September2020,the NAV persharewas 1,434.66pandthesharepricewas
1,402.50p
. The
discount
is
therefore
calculated
at
2.2
%
asshowninthehighlightsabove.
|
|
Net gearing employed
Unlike
open-endedinvestmentcompanies,InvestmentTrustshavetheabilitytoborrowtoinvest.ThistermisusedtodescribethelevelofborrowingsthatanInvestmentTrusthasundertaken,andisstatedasapercentageofshareholders'funds.Thehigherthelevelofborrowings,thehigherthegearingratio.
|
|
Net
gearing
is
calculated
astotaldebt,netofcashandcashequivalents,asapercentageof thetotalshareholders'funds.
|
|
Asat30September2020,interestbearingbankloanswere(£9,072,000),cashandcashequivalentswere£7,712,000andnetassetswere£240,068,000.Asat30September2020,Gearing wasthereforeequalto 0.6%asshownintheHighlightsabove.
|
|
Ongoing charges (expressed as a percentage)
OngoingchargesaretheCompany'srevenue andcapitalexpenses(excludingfinancecostsandcertainnon-recurringitems)expressed asapercentageoftheaveragedailynetassetsoftheCompanyduringthe period.
|
Ongoing charges calculation
|
|
|
Six
months
to
30
September 2020
£'000
|
Six months to 30 September 2019
£'000
|
31 March 2020
£'000
(Audited)
|
|
Total
expenditure
|
|
1,339
|
1,105
|
2,206
|
|
Less
negative
interest
|
|
(79)
|
(26)
|
(34)
|
|
Less
non-recurring
costs
|
|
-
|
-
|
-
|
|
Total
|
(a)
|
1,260
|
1,079
|
2,172
|
|
Average
daily
net
assets
|
(b)
|
216,742
|
184,753
|
184,174
|
|
Ongoing
charges
(c
=a/b)*
|
(c)
|
1.2%
|
1.2%
|
1.2%
|
* 30 September 2020 and 30 September 2019 figures annualised for comparison (c = (a/b) x 2).
Glossary
of
terms
|
|
AIFMD
Alternative
Investment
Fund
ManagersDirective.IssuedbytheEuropeanParliamentin2012and2013,theDirectiverequiresthatallinvestmentvehiclesintheEuropeanUnion,includingInvestmentTrusts,must,witheffectfrom22July2014,appointaDepositaryandanAIFM.TheBoardofDirectorsofanInvestment Trust, nevertheless,remainsfullyresponsibleforall aspectsoftheCompany'sstrategy,operationsandcompliancewithregulations.
|
|
AIC
TheAssociationofInvestmentCompaniesisthetradebodyforClosed-endInvestment Companies(www.theaic.co.uk).
|
|
Benchmark
This
is
ameasureagainstwhichanInvestment Trust's performanceiscompared.ThebenchmarkoftheCompanyistheMSCIEuropeSmallCap(exUK)Index(capitalreturninSterlingterms).TheindexaveragestheperformanceofadefinedselectionofcompanieslistedinEuropeansmallercompanystockmarketsandgivesanindicationofhowthosemarketshaveperformedinanyperiod.
|
|
Closed-end Investment Company
Acompany,includinganInvestment Trust, withafixedissuedordinarysharecapitalwhich istradedonanexchangeatapricenotnecessarilyrelatedtothe NAV ofthecompanyandwheresharescanonlybeissuedorboughtbackbythecompanyincertaincircumstances. Thiscontrastswithanopen-endedinvestmentcompany,whichhasunitsnottradedonanexchangebutissuedorboughtbackfrominvestorsatapricedirectlyrelatedtotheNAV.
|
|
Custodian
Aspecialisedfinancialinstitutionresponsibleforsafeguarding,worldwide,thelistedsecuritiesandcertaincashassetsoftheCompany,aswellastheincomearisingtherefrom, throughprovisionofcustodial,settlementandassociatedservices.TheCompany's CustodianisBankofNew York MellonSA/NV.
|
|
Depositary
Under
AIFMD
rulesapplyingfrom22July2014,theCompanymustappointaDepositary, whosedutiesinrespectofinvestments,cashandsimilarassetsinclude:safekeeping; verificationofownershipandvaluation;andcashmonitoring.TheDepositaryhasstrictliabilityforlossofanyinvestmentsorotherassetswhereithassafekeepingduties.TheDepositary'soversightdutiesinclude,butarenotlimited to, oversightofsharebuybacks, dividendpaymentsandadherencetoinvestmentlimits.TheCompany'sDepositaryisTheBankofNew York Mellon(International)Limited.
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Dividend
Theincomefromaninvestment.SomeInvestmentTrustspaydividendsonaquarterlyormonthlybasis.MontanaroEuropeanSmallerCompaniesTrustplccurrentlypaysdividends twicea year.
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Gearing
Gearing
is
calculated
astotalliabilitieslesscurrentassetsdividedbynetassets.
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Gross
assets
Gross
assets
are
calculated
astotalassetslesscurrentliabilities.
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IFRS
International
Financial
ReportingStandards.
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Investment Manager
TheCompany'sinvestmentmanagerisMontanaroAssetManagementLimited.
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Investment Trust
AClosed-endInvestmentCompanywhichsatisfiestherequirementsofSection1158ofthe Corporation Tax Act2010.Companieswhichmeetthesecriteriaareexemptfromhavingto paytaxonthecapitalgainstheyrealisefromsalesoftheinvestmentswithintheirportfolios.
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Leverage
AsdefinedundertheAIFMDrules,LeverageisanymethodbywhichtheexposureofanAIFisincreasedthroughborrowingofcashorsecuritiesorleverageembeddedinderivativepositions.LeverageisbroadlyequivalenttoGearing,butisexpressedasaratiobetween theassets(excludingborrowings)andthenetassets(aftertakingaccountofborrowings). Underthegrossmethod,exposurerepresentsthesumoftheCompany'spositionsafter deductionofcashandcashequivalents,withouttakingaccountofanyhedgingornetting arrangements.Underthecommitmentmethod,exposureiscalculatedwithoutthe deductionofcashandcashequivalentsandaftercertainhedgingandnettingpositionsareoffsetagainsteach other.
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Marked to Market
Accounting
for
the
fair
value
of
anassetorliabilitythatcanchangeovertimeandreflectsitscurrentmarketvalueratherthanitsbookcost.
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Market Capitalisation
Thestockmarketvalueofacompanyasdeterminedbymultiplyingthenumberofsharesin issue,excludingthosesharesheldintreasury,bythemarketpriceoftheshares
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N
AV
per OrdinaryShare
This
is
calculated
asthenetassetsofanInvestmentTrustdividedbythenumberofshares inissue,excludingthosesharesheldintreasury.
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Net Assets (or Shareholders' Funds)
This
is
calculated
asthevalueoftheinvestmentsandotherassetsofanInvestment Trust, pluscashanddebtors,lessborrowingsandanyothercreditors.Itrepresentstheunderlying valueofanInvestmentTrustatapointintime.
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Net Gearing
Net
gearing
is calculated
astotaldebt,netofcashandcashequivalents,asapercentageof thetotalshareholders'funds.
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Ordinary
Shares
ThemaintypeofequitycapitalissuedbyconventionalInvestmentTrusts.Shareholdersare entitledtotheirshareofbothincome,intheformofdividendspaidbytheInvestment Trust, andanycapitalgrowth.MontanaroEuropeanSmallerCompaniesTrustplchasonly OrdinarySharesinissue.
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Portfolio Turnover
Calculated
using
the
total
purchases
plus
the
salesproceedsdividedbytwoasapercentageoftheaveragetotalinvestmentsatfairvalueduringthe year.
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Related Party Transactions
Under the Listing Rules, the Manager is regarded as a related party of the Company.
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Share
Price
Thevalueofashareatapointintimeasquotedonastockexchange.ThesharesofMontanaroEuropeanSmallerCompaniesTrustplcarequotedontheMainMarketoftheLondonStockExchange.
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SORP
Statement
of
RecommendedPractice"FinancialStatementsofInvestmentTrustCompaniesandVentureCapitalTrusts"issuedbytheAIC.
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Total
Assets
This
is
calculated
asthevalueoftheinvestmentsandotherassetsofanInvestment Trust,pluscashanddebtors.
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Shareholder Information
The Board has decided it will no longer post a hard copy of its Half-Yearly Report to shareholders. This is not a legal requirement and the Board believes that reducing the number of hard copy documents sent by post will deliver cost savings to the Company in terms of administration, printing and postage costs. The reduced use of paper will also have environmental benefits.
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Directors and Advisers
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Registered
Office
16
Charlotte
Square
Edinburgh
EH2
4DF
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Depositary
THEBANKOFNEWYORKMELLON(INTERNATIONAL)LIMITED
OneCanada SquareLondonE145AL
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Registered
in
Scotland
No.
SC074677
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AninvestmentcompanyasdefinedunderSection833oftheCompaniesAct2006.
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Custodian
BANK
OFNEWYORKMELLONSA/NV
OneCanada SquareLondonE145AL
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Directors
RMCurling (Chairman)
CARoxburgh
MRSomersetWebb
G J Neilly
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Investment Manager and Alternative InvestmentFund Manager ('AIFM')
MONTANARO
ASSETMANAGEMENTLIMITED
53
Threadneedle
Street
London
EC2R
8AR
Tel:
020
7448
8600
Fax:02074488601
Email:
enquiries@montanaro.co.uk
www.montanaro.co.uk
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Registrar
EQUINITI
LIMITED
AspectHouse,
SpencerRoad,Lancing
West
Sussex
BN996DA
Registrar's
Shareholder
Helpline
Tel:
0371
384
2461*
*Lines are open 9.00am to 5.00pm, Monday to Friday,excluding public holidays in England and Wales.
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Administrator
LINK
ALTERNATIVE
FUND
ADMINISTRATORS
LIMITED
BeaufortHouse
51
New
NorthRoad,ExeterEX44EP
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Stockbroker
CENKOS
SECURITIES
PLC
6.7.8
Tokenhouse
Y
ard
London
EC2R
7AS
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Company Secretary
LINK
COMPANY
MATTERS
LIMITED
65GreshamStreetLondonEC2V7NQ
Tel:
020
7954
9531
Contact:
mesct@linkgroup.co.uk
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Auditor
ERNST
&YOUNGLLP
Atria
One
144
Morrison
Street
Edinburgh
EH3
8EX
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Solicitor
DICKSON
MINTO
W.S.
16
Charlotte
Square
Edinburgh
EH2
4DF
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Website
https://montanaro.co.uk/trust/montanaro-european-smaller-companies-trust/
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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.
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For further information, please contact:
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Montanaro Asset Management Limited
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Tel: 020 7448 8600
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IR FFIFAUESSEIF
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