Interim Results

Montanaro UK Smlr Cos Inv Tst PLC
6 November 2000



             
             MONTANARO UK SMALLER COMPANIES INVESTMENT TRUST PLC              
                 PRELIMINARY ANNOUNCEMENT OF INTERIM RESULTS                  
           

The Directors announce the unaudited statement of interim results
for the period 1 April 2000 to 30 September 2000 as follows:-
            
                                                   
              SUMMARISED STATEMENT OF TOTAL RETURN 
     (incorporating the revenue account*) of the Company

                                                               **Restated
                                   1 April 2000               1 April 1999
                              to 30 September 2000       to 30 September 1999
                          Revenue  Capital   Total   Revenue  Capital   Total
                          £'000      £'000   £'000     £'000    £'000   £'000

Gains on investments          -      4,139   4,139       -      6,440   6,440
Income                    1,092          -   1,092   1,082          -   1,082
Investment Management   
  fee                      (302)         -    (302)   (258)         -    (258)
Other expenses             (123)         -    (123)   (119)         -    (119)
                          -----      -----   -----   -----     ------  ------ 
Return before interest
 and taxation               667      4,139   4,806     705      6,440   7,145
Interest payable and
 similar charges           (375)         -    (375)   (320)         -    (320)
                          -----      -----   -----   -----     ------  ------
Return on ordinary 
 activities 
 before taxation            292      4,139   4,431     385      6,440   6,825 
Taxation on 
 ordinary activities          -          -       -       -          -       - 
                          -----      -----   -----   -----     ------  ------ 
Return on ordinary 
 activities after 
 taxation                   292      4,139   4,431     385      6,440   6,825
                          =====      =====   =====   =====      =====   ===== 

Return per ordinary share
 - basic                   0.73p     10.32p  11.05p   0.82p     13.67p  14.49p
 - diluted***                 -          -       -    0.81p     13.56p  14.37p

* The revenue column of this statement is the revenue account of the Company.

** The accounts have been prepared using accounting standards and policies
adopted at the year end. Income has been calculated in accordance with
Financial Reporting Standard No. 16: Current Taxation. The Comparatives have
been restated to reflect this change. This change in presentation has no
effect on the revenue return per ordinary share on ordinary activities after
taxation.

*** Following the purchase for cancellation of all outstanding warrants during
the year ended 31 March 2000, there is no longer a diluted return per ordinary
share.

These accounts are unaudited and are not the Company's statutory accounts.


SUMMARISED BALANCE SHEET:
                                 As at               As at              As at
                     30 September 2000       31 March 2000  30 September 1999
                                 £'000               £'000              £'000
 
Fixed asset investments         99,882             100,253             83,139 
Net current assets               6,061               1,254              3,647
Long term credit facility       (7,500)             (7,500)            (7,500)
                                ------               -----             ------
Total assets                    98,443              94,007             79,286 
Less:current period revenue       (292)                  -               (385)
                                ------              ------             ------
Net assets for the purpose 
 of calculating the net asset 
 value per ordinary share       98,151              94,007             78,901
                                ======              ======             ======
   
Net asset value per 
 ordinary share
- basic                         244.76p             234.43p             167.5p
- fully diluted****                  -                   -              167.1p

**** Following the purchase for cancellation of all outstanding warrants
during the year to 31 March 2000, there is no longer a fully-diluted net asset
value per ordinary share. The fully-diluted net asset value per ordinary share
at 30 September 1999 assumed that all existing warrants in issue were
exercised at a subscription price of £1.

SUMMARISED STATEMENT OF CASH FLOWS

                                         1 April 2000            1 April 1999
                                 to 30 September 2000    to 30 September 1999
                                                £'000                   £'000

Net cash inflow from operating activities         110                     918
                                                -----                   -----
Servicing of finance
 - Interest and similar charges paid             (434)                   (322)
                                                -----                   -----
Net cash outflow from servicing of finance       (434)                   (322)
                                                -----                   -----
Capital expenditure and financial investment
 - Purchase of investments                    (15,421)                (11,888)
 - Sale of investments                         21,586                  16,110
                                                -----                   -----
Net cash inflow from capital expenditure and    6,165                   4,222
 financial investment                           -----                   -----

Equity dividends paid                            (120)                   (283)
                                                -----                   ----- 
Financing
 - Proceeds of short-term credit facility           -                   2,500
 - Repayment of short-term credit facility     (7,500)                 (2,500)
 - Warrants repurchased and cancelled              (7)                   (935)
                                                -----                   -----
Net cash outflow from financing                (7,507)                   (935)
                                                -----                   -----
(Decrease)/increase in cash                    (1,786)                  3,600
                                                =====                   =====


The unaudited interim financial information which does not constitute
statutory accounts has been prepared on the basis of the accounting policies
set out in the statutory accounts of the Company for the year ended 31 March
2000. Those statutory accounts received an unqualified audit opinion and have
been filed with the Registrar of Companies.

Performance

Over the six months to 30 September 2000, the Company's net asset value
('NAV') increased by more than 4% in comparison with its benchmark, the FTSE
SmallCap (excluding investment trusts) Index (the 'SmallCap'), which rose by
almost 2%.

Technology, Media and Telecommunications ('TMT') shares were particularly
volatile with dramatic price falls occurring up to the end of May 2000. TMT
share prices rallied briefly in August 2000 and then fell further towards the
end of the six months.  The portfolio, with its growth bias, performed broadly
in line with its benchmark during the first quarter but subsequently
outperformed as the market began to focus on quality growth situations and
defensive value. We are pleased to have outperformed by almost 3% in a
difficult market.

At the Annual General Meeting in July 1999 the Company received shareholder
approval to repurchase up to 6 million shares. The discount of the Company has
narrowed over the past six months from 26% to 19%, which reflects a gradual
recovery in confidence in UK small companies and an awareness of the Board's
pro-active approach to managing the discount. 

As a result of the increase in NAV and the narrowing of the discount, the
Company's share price has risen by more than 14% over the six months and by
over 41% during the past twelve months.  

Review

Although the SmallCap gave a positive return over the last six months, the
Hoare Govett Small Companies Index ('HGSC') did not and has underperformed the
SmallCap by 11% over the last year.  Not only does this underperformance by
the HGSC suggest that the Company has fared even better than might first
appear, but it raises once again the debate about suitable smaller company
benchmarks. Different weightings in TMT stocks and distortions resulting from
changes to the constituents of the SmallCap in March 2000 may, in part,
explain the difference.

TMT stocks (in which many funds were overweight at 1 April 2000) have been
extremely volatile: The techMark-100 Index fell from its high of 5,743 on 6
March 2000 to a low on 25 May 2000 of 2,864, a decline of no less than 50%. 
Despite a recovery in the last few months, it has been a bumpy ride for many
more willing to take higher stock specific and sector risk than we have been.

Investor attitudes have vacillated. Signs of slowing in the economy and
concern over the strength of sterling have resulted in UK interest rates
remaining unchanged. A general perception that interest rates had peaked led
to a rally in August 2000, which proved to be short lived. Although the rate
of wage inflation appears to have eased, labour costs have continued to
increase and, combined with rising raw material and energy prices, have
squeezed the margins of companies competing with overseas suppliers.

In addition, information technology companies began to acknowledge that the
anticipated resurgence in spending, following the resolution of Y2K issues,
has yet to materialise.  Earnings estimates for some smaller companies proved
too high and downgrades began to appear.

In September 2000, the dramatic increase in the price of oil and the petrol
tax revolt shook confidence further and led to fears of a sharp slowdown in
the global economy. However, towards the end of the month a more balanced view
seemed to be taking hold, with investors focusing on quality growth situations
and defensive value. 

Outlook

The rest of the year is likely to be dominated by the interest rate outlook,
both here and in the US, and the impact of any slowdown on corporate earnings.
Given the uncertainty surrounding the oil price and exchange rates, which
makes the interest rate outlook even more unpredictable, we expect to see
continued volatility.

This is a time for holding quality growth companies with strong balance
sheets, earnings and positive cashflow, which comprise the core of the
portfolio. With a neutral weighting in TMT currently, we continue to watch for
opportunities to increase our exposure. Overall, valuations of small companies
remain attractive, particularly in relation to large ones.

The interim report will be despatched to shareholders in late November 2000
and will be available from the registered office of the company, 23 Cathedral
Yard, Exeter, EX1 1HB.
 



...............................................
Brandon Gough
Chairman
6 November 2000