Interim Management Statement

RNS Number : 5449N

F&C Global Smaller Companies PLC

18 February 2009

 



Date:          18 February 2009

Contact:    Peter Ewins    

                    F&C Management Limited    

                    020 7628 8000    

F&C Global Smaller Companies PLC

Interim Management Statement

for the quarter ended 31 January 2009

Objective

F&C Global Smaller Companies PLC invests in smaller companies worldwide in order to secure a high total return.

Summary of results

Capital return

Attributable to equity shareholders	31 January 2009	31 October 2008	% Change
Share price	287.25p	285.00p	+0.8
Net asset value per share (debenture at nominal value)	319.11p	320.66p	-0.5
Net asset value per share (debenture at market value)	310.46p	313.40p	-0.9

Manager's review

During the three months under review, equity markets have been hugely volatile, but the share price, net asset value per share ('NAV') and Benchmark (40% Hoare Govett Smaller Companies Index and 60% MSCI World ex UK Small Cap Index) all ended little changed on the period.

Measured in total return terms, the NAV including the debenture at nominal value fell by 0.1%, while the Benchmark fell by 0.4%. For the nine months ended 31 January 2009, the NAV was down 24.5% against a fall of 27.6% for the Benchmark.

Markets have been buffeted by continuing bad news on the economic front, with most of the developed world now officially in recession. A significant slowdown is also taking place in Asia, including China. This has been reflected in falling analyst forecasts for company profits, and the availability of finance as a result of the current issues confronting the banking sector continues to be a major problem. Against this, Central Banks and governments around the world have been active, cutting interest rates to historic lows in many places, and announcing fiscal stimulus plans which will certainly help over time.

Another feature of the period was a progressive weakening in sterling against the other major currencies, which has helped the NAV and relative performance given the underweight position of the portfolio to the UK. Sterling has suffered as the UK economy is expected to be hurt more than others in the current downturn due, at least in part, to its dependence on the financial sector and higher consumer indebtedness. Performance against the Benchmark in the three months also benefited from positive stock selection in the US portfolio and within the Asian collective investments, though we were behind the local small cap indices in the UK, Europe and Japan.

There were no major changes in the geographic spread of the portfolio, although Japan's strong performance, helped by the strength of the yen, fed through to an increase in exposure here. We became more cautious through the period with regard to Europe, where export orientated companies are facing particular difficulties at present, and we moved underweight relative to the Benchmark. At the end of the period, we were also underweight in the UK, though we have recently started to add cautiously to the exposure again after relative weakness. We are overweight in the US, where we remain hopeful that signs of an economic improvement will eventually be evident here earlier than elsewhere. We are also overweight in Asia and marginally so in Japan.

Reflecting near term caution about the overall outlook, we have moved into a 1% net cash position from having 1.6% gearing at the end of October 2008. 

The discount ended the period at 6.5% (based on NAV ex income with the debenture at market value), down from 8.3% at 31 October 2008. The Company has actively continued to buy back shares, and during the three month period 509,000 shares (1.2% of share capital) were bought back and cancelled at a cost of £1,297,000. 

Having recognised £1m of recoverable VAT in the 2007/8 accounts, we can now report that this amount, together with a further £0.6m of VAT and related interest, has been received.

Ten largest equity holdings at 31 January 2009 

31 January 2009	31 October 2008	Company Country	% of total investments
1	1	iShares MSCI Japan Japan	5.3
2	2	Axa Rosenberg Japan Small Cap Japan	5.3
3	4	Aberdeen Global-Asian Smaller Companies Fund Asia Pacific ex Japan	1.5
4	6	The Scottish Oriental Smaller Companies Trust Asia Pacific ex Japan	1.4
5	5	Allianz GIS RCM Little Dragons Fund Asia Pacific ex Japan	1.4
6	3	Crawford & Company United States	1.4
7	8	Axa Rosenberg Pacific ex Japan Small Cap Asia Pacific ex Japan	1.1
8	10	SDL United Kingdom	1.0
9	7	Connaught United Kingdom	1.0
10	13	Utilico Emerging Markets Asia Pacific ex Japan	1.0

  Geographical distribution of the investment portfolio at 31 January 2009

	31 January 2009 % of total investments	31 October 2008 % of total investments
North America	46.4	47.3
United Kingdom	29.0	29.1
Japan	10.5	8.6
Continental Europe	7.0	8.8
Rest of World	7.1	6.2

Further information

Further information, including monthly factsheets and NAV's published since the end of the quarter, can be found on the www.fandcglobalsmallers.com website.

The Board is not aware of any significant events or transactions that have occurred between 31 January 2009 and the date of publication of this statement which would have a material impact on the financial position of the Company.  

By order of the Board

F&C Management Limited, Secretary

Exchange House, Primrose Street, London EC2A 2NY

18 February 2009

 

END

 

 

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