Interim Results

MONTANARO UK SMALLER COMPANIES INVESTMENT TRUST PLC PRELIMINARY ANNOUNCEMENT OF UNAUDITED INTERIM RESULTS The Directors announce the unaudited statement of results for the six months to 30 September 2006 as follows:- INCOME STATEMENT (UNAUDITED) 6 months 6 months Year to 31 March 2006 to 30 September 2006 to 30 September 2005 Revenue Capital Total Revenue Capital Total Revenue Capital Total Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 (Losses)/gains - (155) (155) - 13,893 13,893 - 33,354 33,354 on investments at fair value Dividends and 1,254 - 1,254 1,129 - 1,129 1,986 - 1,986 interest Management fee (339) (339) (678) (269) (566) (835) (592) (1,296) (1,888) Other expenses (180) - (180) (160) - (160) (336) - (336) Net return 735 (494) 241 700 13,327 14,027 1,058 32,058 33,116 before finance costs and taxation Interest payable (142) (142) (284) (119) (119) (238) (258) (258) (516) and similar charges Net return 593 (636) (43) 581 13,208 13,789 800 31,800 32,600 before and after taxation Return per 1.67p (1.79)p(0.12)p 1.67p 38.00p 39.67p 2.30p 91.57p 93.87p ordinary share* * The calculation of returns per ordinary share excludes shares held in Treasury, so the weighted average number of shares in issue during the period has been adjusted to reflect this. No shares were held in Treasury in the current period. The total column of this statement is the profit and loss account of the Company. The supplementary revenues and capital columns are presented under guidance issued by the Association of Investment Companies (AIC). All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the period. SUMMARISED RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS (UNAUDITED) for the six months to 30 September 2006 Called-up Share Capital Special Capital Revenue Own Total equity share premium redemption reserve reserves reserve shares shareholders' capital account reserve held in funds Treasury Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 6 months to 30 September 2006 As at 1 April 3,561 19,307 1,149 9,835 73,298 1,611 - 108,761 2006 Net loss on - - - - (155) - - (155) investments Costs allocated - - - - (481) - - (481) to capital Net revenue for - - - - - 593 - 593 the period Dividends paid in - - - - - (819) - (819) period As at 30 3,561 19,307 1,149 9,835 72,662 1,385 - 107,899 September 2006 Called-up Share Capital Special Capital Revenue Own Total equity share premium redemption reserve reserves reserve shares shareholders' capital account reserve held in funds Treasury Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 6 months to 30 September 2005 As at 1 April 3,652 18,937 1,058 11,075 41,498 1,818 (2,588) 75,450 2005 Net gains on - - - - 13,893 - - 13,893 investments Costs allocated - - - - (685) - - (685) to capital Repurchase and - - 91 (1,240) - - - (1,149) cancellation of ordinary shares from Treasury Cancellation of (91) - - - - - 2,588 2,497 ordinary shares from Treasury Premium on sale - 370 - - - - - 370 of ordinary shares from Treasury Retained net - - - - - 581 - 581 revenue for the period Dividends paid in - - - - - (1,007) - (1,007) period As at 30 3,561 19,307 1,149 9,835 54,706 1,392 - 89,950 September 2005 Called-up Share Capital Special Capital Revenue Own Total equity share premium redemption reserve reserves reserve shares shareholders' capital account reserve held in funds Treasury Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Â£000 Year to 31 March 2006 As at 31 March 2005 3,652 18,937 1,058 11,075 41,498 1,818 (2,588) 75,450 Net gains on - - - - 33,354 - - 33,354 investments Costs allocated to - - - - (1,554) - - (1,554) capital Cancellation of (91) - 91 (1,240) - - 1,240 - ordinary shares from Treasury Resale of ordinary - - - - - - 1,348 1,348 shares from Treasury Premium on sale of - 370 - - - - - 370 ordinary shares from Treasury Dividends paid in - - - - - (1,007) - (1,007) the year Net revenue for the - - - - - 800 - 800 year As at 31 March 2006 3,561 19,307 1,149 9,835 73,298 1,611 - 108,761 SUMMARISED BALANCE SHEET (UNAUDITED) as at 30 September 2006 As at As at As at 30 September 30 September 31 March 2006 2005 2006 Â£'000 Â£'000 Â£'000 Fixed Assets Investments at fair value 117,378 98,958 115,939 Net current (liabilities)/assets (1,979) (1,508) 322 Revolving credit facility (7,500) (7,500) (7,500) Net assets 107,899 89,950 108,761 Share capital and reserves Called-up share capital 3,561 3,561 3,561 Share premium account 19,307 19,307 19,307 Capital redemption reserve 1,149 1,149 1,149 Special reserve 9,835 9,835 9,835 Capital reserves 72,662 54,706 73,298 Revenue reserve 1,385 1,392 1,611 Total Equity shareholders' funds 107,899 89,950 108,761 Less: current period revenue (593) (581) - Dividend adjustments* - 20 - Total net assets for the purpose of 107,306 89,389 108,761 calculating the net asset value per ordinary share Net asset value per ordinary share 301.34p 251.02p 305.43p * See note 1 SUMMARISED STATEMENT OF CASH FLOWS (UNAUDITED) for the 6 months to 30 September 2006 6 months to 6 months to Year to 30 September 30 September 31 March 2006 2005 2006 Â£'000 Â£'000 Â£'000 Net cash (outflow)/inflow from (298) 506 540 operating activities Servicing of finance - Interest and similar charges paid (245) (218) (500) Net cash outflow from servicing of (245) (218) (500) finance Investing activities - Purchases of investments (13,412) (22,430) (53,721) - Sales of investments 11,868 18,948 53,659 Net cash outflow from investing (1,544) (3,482) (62) activities Equity dividends paid (819) (1,007) (1,007) Net cash outflow before financing (2,906) (4,201) (1,029) Financing - Proceeds of short-term credit - 2,500 2,500 facility - Ordinary shares sold from Treasury - 1,719 1,718 Net cash inflow from financing - 4,219 4,218 (Decrease)/increase in cash (2,906) 18 3,189 Notes to the Financial Statements: as at 30 September 2006 1. DIVIDEND ADJUSTMENTS Prior to the dividend record date of 10 June 2005, the Company re-sold 700,000 shares which had been held in treasury at 31 March 2005. The holders of such shares therefore became entitled to receive a dividend, which was not the case when the shares were held in Treasury. As a result, the total paid in respect of the final dividend relating to the year ended 31 March 2005 was Â£20,000 more than previously disclosed. 2. FINANCIAL INFORMATION The financial information contained in this report does not constitute full statutory accounts as defined in section 240 of the Companies Act 1985. The financial information for the six months ended 30 September 2006 and 30 September 2005 has not been audited. The information for the year ended 31 March 2006 has been extracted from the latest published audited financial statements, which have been filed with the Registrar of Companies. The report of the auditors on those financial statements contained no qualification or statement under sections 237 (2) or (3) of the Companies Act 1985. INVESTMENT MANAGER'S REPORT PERFORMANCE Over the six months ended 30 September 2006, the Company's net asset value (NAV) was broadly in line with its benchmark the FTSE Small Cap (excluding investment companies) Index. From the launch of the Company in March 1995 to the end of September 2006, the NAV has increased 206% compared with 104% by the Small Cap. REVIEW The headline figures for the half year mask some of the turbulence that was seen in the period. This was definitely a tale of two quarters. The buoyant start to the year, which saw the market come within a whisker of a new all time high, came to an abrupt halt during May. Investor sentiment became unsettled by high oil prices, inflationary fears and a multitude of geo-political concerns. A correction that we anticipated would take place over the course of the summer was seen in the space of just five weeks as the market fell almost 10% - the first significant fall since March 2003. This sell off left the Small Cap market down 6% in the quarter ended 30 June 2006. The second fiscal quarter ended 30 September 2006 proved to be rather different. As can happen, the investment community took their summer holidays and came back feeling refreshed and more positive in their outlook. Oil prices started to fall and the geopolitical risks subsided. Additionally, expectations for a positive September results season helped stimulate interest. With this supportive backdrop, the Small Cap market rose 5%. So over two quarters, markets yo-yoed and ended broadly where they started. OUTLOOK While there remains a degree of caution in the market, we maintain a positive outlook. Seventeen consecutive increases in interest rates by the Federal Reserve Board have raised concerns over the state of the US housing market and the possibility of an economic slowdown. However, the UK economy is proving resilient and we are encouraged by what our companies are saying. The recent earnings season met or exceeded market expectations. Indeed we had trading updates or results from 43 of our 73 investments in September alone that were upbeat in both tone and outlook. The takeover theme we have discussed for the past two years has remained a feature in the markets throughout 2006. During the first half, we lost three portfolio companies (Richmond Foods, IFX and Radstone Technology). With the cost of borrowing low by historic standards it remains more attractive for larger companies to buy rather than build. Additionally there is a considerable amount of private equity money in circulation. KPMG data suggests that in the six months from March to September 2006, the total value of the UK buyout market was Â£18bn, up 33% on a year ago. We continue to believe that the next year will see further takeovers with the focus remaining on those well managed, quality businesses, which form the core of the portfolio. In a historic context, the smaller company market remains attractively priced on 14.2x 2007 forecast price/earnings. With cash levels high and further consolidation likely, we believe that good stock selection in the smaller companies market will continue to be well rewarded. Given this view we enter the second half with our Â£10m debt facility fully utilised, leaving gearing at 9%. Dan Harlow Montanaro Investment Managers Limited 24 November 2006

Companies

Montanaro UK Smaller Companies Inv Trust (MTU)

Full Archive

UK 100

Latest directors dealings

All directors dealings today