Interim Management Statement

RNS Number : 1723W

Montanaro European Smaller C.TstPLC

23 July 2009

 



Montanaro European Smaller Companies Trust plc

Interim Management Statement 

For the Three Month Period from 1 April 2009 to 30 June 2009

Investment Objective

Montanaro European Smaller Companies Trust plc aims to achieve capital growth by investing principally in European quoted smaller companies. 

Performance Summary

Capital Return	As at  30 June 2009	As at  31 March 2009	Movement
Net asset value (000's)	£48,371	£42,653	13.4%
Net asset value per share	291.86p	257.36p	13.4%
Benchmark *	-	-	16.5%
Share price	264.50p	220.75p	19.8%
Discount	-9.4%	-14.2%
Net gearing	6.3%	-4.7%

* Composite benchmark based upon MSCI Europe SmallCap Index prior to 31/5/09; MSCI Europe SmallCap (ex-UK) Index thereafter.

Review for the Period

The Company's net asset value per share increased by 13.4% during the three month period ended 30 June 2009. This compares to an increase of 16.5% in the benchmark index.

European stockmarkets performed strongly during the quarter in anticipation of the potential economic effect of the large global fiscal stimuli. Although there is likely to be a further deterioration of economic news during the remainder of 2009, the hope is that the worst is behind us and modest economic growth will return in 2010, bringing with it an improvement in corporate profitability.  

The best performing companies during the quarter were those which were heavily geared or with significant cyclical exposure. This was the principal reason for the Company's underperformance during the period, as the more stable and higher quality businesses of the type invested in by the Company did not benefit from the market rally. 

Within the portfolio, the best performing holdings included BTS Group, a Swedish business consultancy company; Frigoglass, a Greek manufacturer of drink coolers primarily for Coca-Cola; and Azimut, an Italian fund manager.  The worst performers included GfK, a German global leader in market research; Poyry a Finnish consulting engineer and Guerbet, a French manufacturer of fine chemicals used in cancer treatment.

As a reflection of a more optimistic outlook by the Manager, gearing, net of cash, increased to 6.3% during the period, from an initial net cash position.

As stated in the recent annual results announcement, since the change of Manager in 2006, the Company has invested in companies quoted within Continental Europe and the United Kingdom. As at 31 March 2009 17.7% of the Company's portfolio was invested in UK quoted companies.

During the quarter, and having consulted with some of the Company's larger shareholders, the Board decided that it would be more appropriate for the Company to be invested exclusively in Continental European quoted companies at the present time. The Manager therefore realigned the portfolio through a withdrawal from all UK quoted companies. 

As a reflection of this realignment, with effect from 1 June 2009, the Company's benchmark changed to the MSCI Europe SmallCap (ex UK) Index (in sterling terms). This index comprises companies in Continental Europe only. 

As previously stated, this realignment of the portfolio is not a change in the Company's stated investment policy and does not require shareholder approval.

Top Ten Holdings as at 30 June 2009

Company	Country	Percentage of total assets
Andritz	Austria	3.7
Poyry	Finland	3.1
Fugro	Netherlands	3.0
Prosegur Seguridad	Spain	3.0
Arcadis	Netherlands	2.8
Virbac	France	2.7
Indra Sistemas	Spain	2.7
Neopost	France	2.7
Viscofan	Spain	2.6
Vacon	Finland	2.6
Total		28.9

  Geographical Analysis as at 30 June 2009

Country	Percentage of total assets
Netherlands	13.6
Finland	12.6
France	10.5
Spain	10.2
Sweden	9.8
Germany	9.6
Austria	7.0
Switzerland	4.2
Greece	2.9
Ireland	2.7
Italy	2.6
Norway	2.2
Belgium	1.2
Liquidity	10.9
Total	100.0

Sector Distribution as at 30 June 2009

Sector	Percentage of total assets
Industrials	38.5
Consumer Goods	10.6
Technology	9.7
Oil & Gas	8.8
Healthcare	7.5
Financials	6.4
Consumer Services	5.3
Basic Materials	2.3
Liquidity	10.9
Total	100.0

The Board is not aware of any significant events or transactions which have occurred since 30 June 2009 and the date of publication of this statement which would have a material impact on the financial position of the Company.

Daily and Key Information

This statement and further information regarding the Company, including monthly factsheets, can be found at the Manager's website: www.montanaro.co.uk. 

This Interim Management Statement has been prepared solely to provide information to meet the requirements of the UK Listing Authority's Disclosure and Transparency Rules.

For further information please contact:

Charles Montanaro

Montanaro Investment Managers Limited

Tel: [phone]

 

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