Montanaro UK Smaller
Companies Investment Trust PLC ("MUSCIT'' or the
"Company")
LEI: 213800UDDXXTXIF29P85
Half-Yearly Report for the
six months to 30 September 2024
· With effect from 31
December 2024 the Company will be paying a regular quarterly
dividend equivalent to 1.5% of the Company's NAV, amounting to a
yield of c.6% annually.
· The investment
management fee of 0.50% per annum will now be calculated based on
net assets rather than gross assets with effect from 31 December
2024
· The net asset value
rose by 4.2% (with dividends reinvested) compared to a total return
of +10.6% for the benchmark, the NSCI.
· The discount narrowed
to 12.8% from 15.1%, resulting in a higher share price total return
of +7.3%. The S&P 500 returned +4%, the NASDAQ +5%, and the
FTSE All-Share +6.1%.
|
Performance
as at 30
September 2024
|
|
|
Total Return
Percentage
|
6
months
|
1
year
|
3
years
|
5
years
|
10 years
|
Since launch
|
|
Share
Price*
|
7.3
|
11.1
|
-26.2
|
21.0
|
68.2
|
912.4
|
|
Net asset
value*
|
4.2
|
14.7
|
-20.4
|
13.4
|
58.0
|
917.3
|
|
Benchmark**
|
10.6
|
20.0
|
0.5
|
32.6
|
85.0
|
624.7
|
* Returns have been adjusted for
dividends paid.
** The Benchmark is a composite
index with the NSCI used since 1 April 2013. Sources: LSEG,
Deutsche Numis, Montanaro Asset Management Limited.
|
|
As at
|
As at
|
|
|
|
30 September
|
31 March
|
|
|
|
2024
|
2024
|
|
|
|
(unaudited)
|
(audited)
|
% Change
|
|
Ordinary
share price1
|
106.0p
|
101.0p
|
5.0
|
|
Net asset
value ("NAV") per Ordinary share2
|
121.6p
|
118.9p
|
2.3
|
|
Discount
to NAV2
|
12.8%
|
15.1%
|
|
|
NSCI3
|
8,613.3
|
7,970.9
|
8.1
|
1 LSE
closing price.
2 Including accrued revenue.
3 Capital
only.
|
|
As at
|
As at
|
|
|
|
30 September
|
31 March
|
|
|
|
2024
|
2024
|
|
|
|
(unaudited)
|
(audited)
|
% Change
|
|
Gross
assets1
|
£223.5m
|
£219.1m
|
2.0
|
|
Net
assets
|
£203.5m
|
£199.1m
|
2.3
|
|
Market
capitalisation
|
£177.4m
|
£169.1m
|
5.0
|
|
Net
gearing employed2
|
6.3%
|
2.7%
|
|
|
Ongoing
charges3
|
0.9%
|
0.9%
|
|
|
Portfolio
turnover4
|
22.3%
|
23.4%
|
|
1 Net
assets, adding back borrowings.
2 Total
debt, net of cash and equivalents, as a percentage of shareholders'
funds.
3 Company's expenses (excluding interest payable) expressed as
a percentage of its average daily net assets, annualised at the
half year end date.
4 Calculated using the total purchases plus the sales proceeds
divided by two as a percentage of the average total investments at
fair value during the period.
Chairman's
Statement
Performance
In the six-month period ended 30 September 2024,
MUSCIT's NAV rose by 4.2% (with dividends reinvested) compared to a
total return of +10.6% for the benchmark, the NSCI
Index.
Over the past four years, the dominance in
performance of Value over Growth as an investment style has been a
key theme in SmallCap investing - and it remains as relevant as
ever. The last six months have again posed challenges for
Growth managers, including our Manager, as SmallCap Growth stocks
underperformed SmallCap Value by more than 7% (and a staggering 78%
over four years). MUSCIT's underperformance of 6.4% over the
past six months is consistent with that of Growth over this
period.
Similarly, AIM continued to underperform, lagging
Main List SmallCap by 8% during the period. MUSCIT, which held
between 15% and 22% in companies traded on AIM during this period,
underperformed the NSCI (inclusive of AIM) by less at -3.4%.
The discount narrowed to 12.8% from 15.1% at 31
March 2024, resulting in a higher share price gain of +7.3%. For
context, the S&P 500 returned 4%, the NASDAQ 5%, and the FTSE
All-Share 6.1% over the same period, all expressed as total returns
in Sterling.
Investment
Management Fee
The Board is pleased to announce that, with effect
from 31 December 2024, the investment management fee of 0.50% per
annum will be calculated based on net assets rather than gross
assets. This adjustment reflects the Board's ongoing
commitment to delivering value for the Company's investors and
follows discussions with shareholders. At 0.50% of net
assets, the investment management fee remains among the most
competitive in the UK SmallCap investment trust sector.
Dividend
Policy
The Board last updated the Company's dividend policy
in 2018, introducing quarterly dividends amounting to 1% of NAV on
the last business day of the preceding financial quarter, being the
end of March, June, September and December. The resulting
annual yield of approximately 4% offered investors an attractive
way to earn regular income and helped to broaden the appeal of the
Company's shares. The Board was pleased to see the share
price discount to NAV of c.20% at the time of the announcement
subsequently tighten and eventually disappear by the end of
2020. By December 2022, MUSCIT's share price had reached a
premium of 3%.
However, the Board is aware that the interest rate
environment has changed considerably since 2018. At the time
of the change in the dividend policy, 10-year Gilt yields stood at
around 1.3%, which compares to approximately 4.5% today.
The Board believes that it is important for the
Company's dividend policy to continue to fulfil its role of
attracting new investors and as a result helping to narrow the
discount. Consequently, with effect from 31 December 2024,
the Company will be paying a regular quarterly dividend equivalent
to 1.5% of the Company's NAV, amounting to a yield of c.6%
annually. At the current discount of 12.8% the share price yield
would be 6.9%. The first dividend payment to be made at the
increased rate will be in February 2025.
The Board believes that the revised dividend policy
is in the best interests of the Company and shareholders as a
whole.
The dividends will continue to be funded partly from
capital reserves and partly from current year revenue.
Currently, it is estimated that there are sufficient capital
reserves to pay this level of dividend for 40 years even assuming
no growth in capital or income in the underlying portfolio
companies shares. The Board will keep the dividend policy and
its impact on the demand for the Company's shares under regular
review.
There will be no change to the existing investment
policy or to the strategy. The Investment Manager will
continue to seek high quality companies that have strong growth
prospects for the Company's portfolio. Dividend yield will not be a
significant part of the investment process.
Arthur Copple
Chairman
5 December 2024
Manager's Review
While some assume that the summer months are a
quieter time for stock markets, with fund managers escaping to
sunnier destinations, this is not the case for us. After reducing
our AIM exposure through the sale of YouGov and Judges Scientific,
we have been actively seeking new investment opportunities. Our
universe constantly evolves, with new flotations, takeovers,
spin-offs, and so-called "fallen angels" - companies that were once
too large for our focus but now fit our scope. Staying active is
essential, as we continue searching for the best opportunities. Our
work resulted in us investing in several quality companies,
including Alpha Group, Gamma Communications, Telecom Plus, Baltic
Classifieds and JTC.
We also participated in the IPO of Raspberry Pi, a
Cambridge-based developer of computer boards and computing units
serving the Education & Enthusiasts and Industrial &
Embedded markets. Founded by Eben Upton in 2008, Raspberry Pi began
as a charitable foundation to inspire young minds in computer
science, producing credit-card-sized computers priced under £15 for
schools. The product line now includes semiconductors, computer
modules, and various accessories. With a market capitalisation of
approximately £500 million, Raspberry Pi's size aligns well with
our focus and is often overlooked by larger institutions. It began
trading on June 10, 2024, at £2.80 per share and is currently
around £3.30.
As we write these lines, the much-anticipated Budget
announcement has come and gone. Despite a range of tax increases -
including those on capital gains, National Insurance and
Inheritance Tax on AIM - the changes were less severe than feared,
and we believe smaller companies will adapt.
Many of these factors are arguably already reflected
in current share prices. UK SmallCap valuations look attractive
across multiple metrics and, at 15.6x, the Shiller P/E ratio points
to the potential for strong returns in SmallCap over the next five
years. Earnings expectations are also promising: while SmallCap
lagged behind LargeCap in EPS growth in 2022 and 2023, it is
projected to catch up in 2024 and move decisively ahead in 2025,
with an anticipated 15% growth versus 7% for LargeCap (source:
FactSet).
It feels as though the headwinds of the past three
years are finally easing. Disinflation is taking hold, political
uncertainties have subsided and M&A activity is picking up.
SmallCap as a whole has outperformed LargeCap over the past six and
twelve months, suggesting that the worst may indeed be behind us.
If SmallCap is entering a new, multi-year cycle of outperformance,
MUSCIT stands to benefit - particularly given its current discount
of around 13%, which compares to a 3% premium less than two years
ago. And while waiting, shareholders can enjoy a 6% yield on
NAV (c.7% based on share price).
Charles Montanaro
Montanaro Asset Management
Limited
5 December 2024
|
Twenty Largest
Holdings
as at 30
September 2024
|
|
|
|
|
|
|
% of portfolio
|
% of
portfolio
|
|
Holding
|
Sector
|
Value
£'000
|
Market cap
£m
|
30 September 2024
|
31
March
2024
|
|
Marshalls
|
Construction and Materials
|
11,655
|
842
|
5.7
|
4.7
|
|
Big
Yellow
|
Real
Estate Investment Trusts
|
10,144
|
2,488
|
5.0
|
5.2
|
|
Games
Workshop
|
Leisure
Goods
|
9,138
|
3,542
|
4.5
|
4.9
|
|
discoverIE
|
Electronic and Electrical Equipment
|
8,816
|
580
|
4.3
|
4.6
|
|
4imprint
|
Media
|
8,715
|
1,403
|
4.3
|
5.4
|
|
Porvair
|
Industrial Engineering
|
8,250
|
306
|
4.0
|
3.8
|
|
Bytes
Technology
|
Software
and Computer Services
|
8,240
|
1,238
|
4.0
|
3.1
|
|
Hilton
Food
|
Food
Producers
|
7,633
|
805
|
3.7
|
3.1
|
|
Clarkson
|
Industrial Transportation
|
7,360
|
1,131
|
3.6
|
4.9
|
|
XPS
Pensions
|
Financial
Services
|
7,225
|
600
|
3.5
|
3.9
|
|
NCC
Group
|
Software
and Computer Services
|
7,128
|
559
|
3.5
|
2.1
|
|
Kainos
|
Software
and Computer Services
|
7,064
|
1,110
|
3.4
|
3.5
|
|
Cranswick
|
Food
Producers
|
6,275
|
2,706
|
3.1
|
4.0
|
|
Raspberry
Pi
|
Technology Hardware and Equipment
|
6,272
|
748
|
3.1
|
-
|
|
Greggs
|
Personal
Care, Drugs and Grocery Stores
|
6,248
|
3,194
|
3.1
|
4.6
|
|
Baltic
Classifieds
|
Software
and Computer Services
|
6,060
|
1,478
|
3.0
|
-
|
|
MP
Evans
|
Food
Producers
|
5,772
|
512
|
2.8
|
2.0
|
|
Genuit
|
Industrial Support Services
|
5,514
|
1,195
|
2.7
|
2.7
|
|
XP
Power
|
Electronic and Electrical Equipment
|
5,483
|
312
|
2.7
|
2.7
|
|
GlobalData
|
Media
|
5,075
|
1,749
|
2.5
|
2.6
|
|
|
|
148,067
|
|
72.5
|
|
Investment Objective
MUSCIT's investment objective is to achieve capital
appreciation through investing in smaller quoted companies listed
on the LSE or traded on the Alternative Investment Market ("AIM")
and to outperform its benchmark, the Deutsche Numis Smaller
Companies Index (excluding investment companies) ("NSCI").
No unquoted investments are permitted.
Investment Policy
The Company seeks to achieve its objective and to
manage risk by investing in a diversified portfolio of quoted UK
smaller companies. At the time of initial investment, a potential
investee company must be profitable and no bigger than the largest
constituent of the NSCI, which represents the smallest 10% of the
UK stock market by value. At the start of 2024, this was any
company below £1.68 billion in market capitalisation. The Manager
focuses on the smaller end of this index.
In order to manage risk, the Manager limits any one
holding to a maximum of 4% of the Company's investments at the time
of initial investment. The portfolio weighting of each investment
is closely monitored to reflect the underlying liquidity of the
particular company. The Company's AIM exposure is also closely
monitored by the Board and is limited to 40% of total investments
at the time of investment, with Board approval required for
exposure above 35%.
The Manager is focused on identifying high-quality,
niche companies operating in growth markets. This typically leads
the Manager to invest in companies that enjoy high barriers to
entry, pricing power, a sustainable competitive advantage and
strong management teams. The portfolio is constructed on a
"bottom-up" basis.
The Board is responsible for setting the Company's
gearing strategy and approves the arrangement of any gearing
facilities. The Alternative Investment Fund Manager ("AIFM") is
responsible for determining the net gearing level within the
parameters set by the Board. The Company's borrowings should be
limited to 25% of shareholders' funds. Gearing is used to
enhance returns when the timing is considered appropriate.
The Company will not invest more than 10%, in
aggregate, of the value of its total assets at the time of
investment in other investment trusts or investment companies
admitted to the Official List of the UK Listing Authority.
All material changes to the policy will require
shareholder and FCA approval.
Capital Structure
As at 30 September 2024 and the date of this report,
the Company had 167,379,790 Ordinary shares of 2p each in issue
(none of which was held in treasury). See note 6 for further
details. Holders of Ordinary shares have unrestricted voting
rights of one vote per share at all general meetings of the
Company.
Interim Management Report and Responsibility
Statement
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 and Manager's
Review above.
Statement of Principal Risks and
Uncertainties:
The principal risks facing the Company are unchanged
since the date of the Annual Report and Accounts for the year ended
31 March 2024 and continue to be as set out in that report on pages
16 to 18 and pages 58 to 60. These include, but are not limited to,
discount management, poor investment performance, risk oversight,
gearing, key man risk, operational risk, cyber risk, administrator,
breach of regulation, including the impact of pandemics and other
unforeseeable events on the Company's business operations,
financial and ESG. The principal financial risks include, but are
not limited to, market risk, market price risk, foreign currency
risk, interest rate risk, liquidity risk, credit risk and gearing
levels. 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.
Related party
transactions:
Related party transactions are disclosed in note 9
below. There have been no material changes in the related party
transactions described in the last annual report.
Going concern:
As stated in note 7 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.
Responsibility Statement
The Directors confirm that to the best of their
knowledge:
·
The condensed set of financial statements which
has not been reviewed or audited by the external Auditor, has been
prepared in accordance with Financial Reporting Standard ("FRS")
104 'Interim Financial Reporting' and gives a true and fair view of
the assets, liabilities, financial position and profit of the
Company; and
· This Half-Yearly
Report includes a fair review of the information required
by:
o DTR 4.2.7R of the Disclosure Guidance and Transparency Rules,
being an indication of important events that have occurred during
the first six months of the financial year and their impact on the
condensed set of financial statements and a description of the
principal risks and uncertainties for the remaining six months of
the financial year; and
o DTR 4.2.8R of the Disclosure Guidance and Transparency Rules,
being related party transactions that have taken place in the first
six months of the current financial year and that have materially
affected the financial position or performance of the Company
during that period and any changes in the related party
transactions described in the last Annual Report that could do
so.
This Half-Yearly Report was approved by the Board
and the above Responsibility Statement was signed on its behalf
by:
Arthur Copple
Chairman
5 December 2024
Condensed Income Statement (unaudited)
for the six months to 30 September 2024
|
|
Six months to
30 September
2024
£'000
|
Six months to
30 September
2023
£'000
|
Year to
31 March
2024
(audited)
£'000
|
|
|
Revenue
|
Capital
|
Total
|
Revenue
|
Capital
|
Total
|
Revenue
|
Capital
|
Total
|
|
Gains/(losses) on investments designated at
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
fair
value through profit or loss
|
-
|
5,520
|
5,520
|
-
|
(6,033)
|
(6,033)
|
-
|
11,137
|
11,137
|
|
Investment income
|
4,263
|
-
|
4,263
|
4,325
|
-
|
4,325
|
6,347
|
-
|
6,347
|
|
Investment management fee
|
(153)
|
(460)
|
(613)
|
(152)
|
(457)
|
(609)
|
(276)
|
(828)
|
(1,104)
|
|
Other
expenses
|
(350)
|
-
|
(350)
|
(341)
|
-
|
(341)
|
(618)
|
-
|
(618)
|
|
Net return before finance
costs and
|
3,760
|
5,060
|
8.820
|
3,832
|
(6,490)
|
(2,658)
|
5,453
|
10,309
|
15,762
|
|
taxation
Interest
payable and similar charges
|
(80)
|
(241)
|
(321)
|
(69)
|
(206)
|
(275)
|
(175)
|
(522)
|
(697)
|
|
Net return before
taxation
|
3,680
|
4,819
|
8,499
|
3,763
|
(6,696)
|
(2,933)
|
5,278
|
9,787
|
15,065
|
|
Taxation
(note 3)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Net return after
taxation
|
3,680
|
4,819
|
8,499
|
3,763
|
(6,696)
|
(2,933)
|
5,278
|
9,787
|
15,065
|
|
|
|
|
|
|
|
|
|
|
|
|
Return per Ordinary
share:
|
2.20p
|
2.88p
|
5.08p
|
2.25p
|
(4.00p)
|
(1.75p)
|
3.15p
|
5.85p
|
9.00p
|
The total column of this statement is the Statement
of Total Comprehensive Income of the Company prepared in accordance
with FRS 102 "The Financial Reporting Standard applicable in the UK
and Republic of Ireland". The supplementary revenue return and
capital return columns are prepared in accordance with the
Statement of Recommended Practice issued by the Association of
Investment Companies ("AIC SORP").
All revenue and capital items in the above statement
derive from continuing operations.
There are no items of other comprehensive income and
therefore the net return after taxation is also the total
comprehensive income for the period. No operations were acquired or
discontinued in the period.
|
Condensed Statement of
Changes in Equity
for the
six months to 30 September 2024
|
|
|
|
Called-up
share
|
Share
premium
|
Capital
redemption
|
Special
|
Capital
|
Distributable
revenue
|
Total equity
shareholders'
|
|
|
capital
|
account
|
reserve
|
reserve*
|
reserve**
|
reserve**
|
funds
|
|
6 months to 30 September
2024 (unaudited)
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
As at 31 March
2024
|
3,348
|
19,307
|
1,362
|
4,642
|
170,230
|
193
|
199,082
|
|
Total
comprehensive income:
Fair
value movement of investments
|
-
|
-
|
-
|
-
|
5,520
|
-
|
5,520
|
|
Costs
allocated to capital
|
-
|
-
|
-
|
-
|
(701)
|
-
|
(701)
|
|
Net
revenue for the period
|
-
|
-
|
-
|
-
|
-
|
3,680
|
3,680
|
|
|
-
|
-
|
-
|
-
|
4,819
|
3,680
|
8,499
|
|
Dividends
paid in the period (note 4)
|
-
|
-
|
-
|
-
|
(1,992)
|
(2,076)
|
(4,068)
|
|
As at 30 September
2024
|
3,348
|
19,307
|
1,362
|
4,642
|
173,057
|
1,797
|
203,513
|
|
6 months to 30 September
2023 (unaudited)
|
|
|
|
|
|
|
|
|
As at 31 March
2023
|
3,348
|
19,307
|
1,362
|
4,642
|
162,418
|
572
|
191,649
|
|
Total
comprehensive income:
|
|
|
|
|
|
|
|
|
Fair
value movement of investments
|
-
|
-
|
-
|
-
|
(6,033)
|
-
|
(6,033)
|
|
Costs
allocated to capital
|
-
|
-
|
-
|
-
|
(663)
|
-
|
(663)
|
|
Net
revenue for the period
|
-
|
-
|
-
|
-
|
-
|
3,763
|
3,763
|
|
|
-
|
-
|
-
|
-
|
(6,696)
|
3,763
|
(2,933)
|
|
Dividends
paid in the period
|
-
|
-
|
-
|
-
|
(1,353)
|
(2,463)
|
(3,816)
|
|
As at 30 September
2023
|
3,348
|
19,307
|
1,362
|
4,642
|
154,369
|
1,872
|
184,900
|
|
Year to 31 March 2024
(audited)
|
|
|
|
|
|
|
|
|
As at 31 March
2023
|
3,348
|
19,307
|
1,362
|
4,642
|
162,418
|
572
|
191,649
|
|
Total
comprehensive income:
|
|
|
|
|
|
|
|
|
Fair
value movement of investments
|
-
|
-
|
-
|
-
|
11,137
|
-
|
11,137
|
|
Costs
allocated to capital
|
-
|
-
|
-
|
-
|
(1,350)
|
-
|
(1,350)
|
|
Net
revenue for the year
|
-
|
-
|
-
|
-
|
-
|
5,278
|
5,278
|
|
|
-
|
-
|
-
|
-
|
9,787
|
5,278
|
15,065
|
|
Dividends
paid in the year (note 4)
|
-
|
-
|
-
|
-
|
(1,975)
|
(5,657)
|
(7,632)
|
|
As at 31 March
2024
|
3,348
|
19,307
|
1,362
|
4,642
|
170,230
|
193
|
199,082
|
* The special reserve is used for the repurchase of
the Company's own shares.
** These reserves are distributable, excluding any
unrealised capital reserve.
|
Condensed Balance Sheet
(unaudited)
as at 30
September 2024
|
As at 30
September
|
As at 30
September
|
As at 31
March
|
|
|
2024
£'000
(unaudited)
|
2023
£'000
(unaudited)
|
2024
£'000
(audited)
|
|
Fixed
assets
Investments at fair value (note 5)
|
216,442
|
199,033
|
204,694
|
|
Current
assets
Debtors
|
466
|
520
|
312
|
|
Cash at
bank
|
7,157
|
5,902
|
14,627
|
|
|
7,623
|
6,422
|
14,939
|
|
Creditors: amounts falling
due within one year
|
|
|
|
|
Other
creditors
|
(552)
|
(555)
|
(551)
|
|
Fixed
rate term loan
|
(20,000)
|
-
|
(20,000)
|
|
|
(20,552)
|
(555)
|
(20,551)
|
|
Net current
(liabilities)/assets
|
(12,929)
|
5,867
|
(5,612)
|
|
Total assets less current
liabilities
|
203,513
|
204,900
|
199,082
|
|
Creditors: amounts after
more than one year
|
|
|
|
|
Fixed
rate term loan
|
-
|
(20,000)
|
-
|
|
Net assets
|
203,513
|
184,900
|
199,082
|
|
Share capital and
reserves
Called-up
share capital
|
3,348
|
3,348
|
3,348
|
|
Share
premium account
|
19,307
|
19,307
|
19,307
|
|
Capital
redemption reserve
|
1,362
|
1,362
|
1,362
|
|
Special
reserve
|
4,642
|
4,642
|
4,642
|
|
Capital
reserve
|
173,057
|
154,369
|
170,230
|
|
Distributable revenue reserve
|
1,797
|
1,872
|
193
|
|
Total equity shareholders'
funds
|
203,513
|
184,900
|
199,082
|
|
Net asset value per Ordinary
share
|
121.59p
|
110.47p
|
118.94p
|
|
|
|
|
|
|
Number of Ordinary shares in
issue
|
167,379,790
|
167,379,790
|
167,379,790
|
Notes to the Financial Statements
As at 30 September 2024
1 Financial Information
The condensed financial statements for the six
months ended 30 September 2024 comprise the statements together
with the related notes. The Company has adopted FRS 102 'The
Financial Reporting Standard applicable in the UK and Republic of
Ireland' in its annual financial statements and the AIC SORP issued
in November 2014 and updated in June 2022. The condensed financial
statements for the six months to 30 September 2024 have been
prepared in accordance with FRS 104 Interim Financial Reporting.
The financial statements have been prepared on the basis of the
same accounting policies as set out in the Company's Annual Report
and Accounts for the year ended 31 March 2024.
Following the adoption of FRS 102, the Company
elected not to present the statement of cash flows per section
7.1.A.
The financial information contained in this
Half-Yearly Report does not constitute full statutory accounts as
defined in section 434 of the Companies Act 2006. The financial
information for the six months to 30 September 2024 and 30
September 2023 has not been audited or reviewed by the Company's
Auditor pursuant to the Auditing Practices Board guidance on such
reviews.
The information for the year ended 31 March 2024 has
been extracted from the latest published Annual Report and
Accounts, which have been filed with the Registrar of Companies.
The Report of the Auditors on those financial statements was
unqualified and did not contain a statement under section 498(2) or
(3) of the Companies Act 2006.
2 Management Expenses and Finance Costs
Management fees and finance costs are allocated 75%
to the capital reserve and 25% to the revenue account. Costs
arising on early settlement of debt are allocated 100% to capital,
in accordance with the requirements of the AIC SORP. All other
expenses are allocated in full to the revenue account on an
accruals basis.
3 Tax Credit/Charge on Ordinary Activities
The tax charge for the six months to 30 September
2024 comprises irrecoverable withholding tax suffered of £nil (six
months to 30 September 2023: £nil; year to 31 March 2024:
£nil).
The corporation tax charge is based on an estimated
effective tax rate of 0% as investment gains are exempt from tax
owing to the Company's status as an investment trust and there is
expected to be an excess of management expenses over taxable
income.
|
4
Dividends
|
6
months to
30 September
|
Year to
31 March
|
|
|
2024
|
2024
|
|
|
£'000
|
£'000
|
|
|
(unaudited)
|
(audited)
|
|
In respect of the previous
period:
|
|
|
|
Paid
|
|
|
|
2023
fourth quarter dividend of 1.15p per Ordinary share
|
-
|
1,925
|
|
2024
fourth quarter dividend of 1.19p per Ordinary share
|
1,992
|
-
|
|
In respect of the period
under review:
|
|
|
|
Paid
|
|
|
|
2024
first quarter dividend of 1.13p per Ordinary share
|
-
|
1,891
|
|
2024
second quarter dividend of 1.10p per Ordinary hare
|
-
|
1,841
|
|
2024
third quarter dividend of 1.18p per Ordinary share
|
-
|
1,975
|
|
2025
first quarter dividend of 1.24p per Ordinary share
|
2,076
|
-
|
|
|
4,068
|
7,632
|
|
Declared
|
|
|
|
2024
fourth quarter dividend of 1.19p per Ordinary share
|
-
|
1,992
|
|
2025
second quarter dividend of 1.22p per Ordinary share
|
2,042
|
-
|
The quarters referred to in the table above relate
to the Company's financial year, which ends on 31 March.
5 Fair Value Hierarchy
For investments actively traded in organised
financial markets, fair value is generally determined by reference
to quoted market bid prices or closing prices for SETS (LSE's
electronic trading service) stocks sourced from the LSE on the
balance sheet date, without adjustment for transaction costs
necessary to realise the asset.
In accordance with FRS 102, the Company must
disclose the fair value hierarchy of financial instruments. The
fair value hierarchy consists of the following three levels:
·
level 1 - Valued using quoted prices, unadjusted
in active markets for identical assets and liabilities.
·
level 2 - Valued by reference to valuation
techniques using observable inputs for the asset or liability other
than quoted prices included in level 1.
·
level 3 - Valued by reference to valuation
techniques using inputs that are not based on observable market
data for the asset or liability. Assessing the significance of a
particular input requires judgement, considering factors specific
to the asset or liability.
The table below sets out fair value measurements of
financial assets in accordance with the FRS 102 fair value
hierarchy system:
|
|
30 September
2024
|
31
March 2024
|
|
|
(unaudited)
|
(audited)
|
|
|
Level 1
|
Total
|
Level 1
|
Total
|
|
£'000
|
£'000
|
£'000
|
£'000
|
|
Equity
investments
|
216,442
|
216,442
|
204,694
|
204,694
|
|
|
216,442
|
216,442
|
204,694
|
204,694
|
There were no level 2 or 3 investments held during
the period.
6 Share Capital
|
|
30 September
2024
|
31
March 2024
|
|
|
(unaudited)
|
(audited)
|
|
|
Number of
shares
|
£'000
|
Number
of shares
|
£'000
|
|
Allotted,
called-up and fully paid:
Ordinary
shares of 2p each (31 March 2024: 2p each)
Balance
at beginning of period
|
167,379,790
|
3,348
|
167,379,790
|
3,348
|
|
Balance
at end of period
|
167,379,790
|
3,348
|
167,379,790
|
3,348
|
7 Going Concern
The Company has adequate financial resources to meet
its investment commitments and its day to day working capital
requirements, and as a consequence, the Directors believe that the
Company is well placed to manage its business risks. After making
appropriate enquiries and due consideration of the Company's cash
balances, the liquidity of the Company's investment portfolio and
the cost base of the Company, the Directors have a reasonable
expectation that the Company has adequate available financial
resources to continue in operational existence for the foreseeable
future and accordingly have concluded that it is appropriate to
continue to adopt the going concern basis in preparing the
Half-Yearly Report, consistent with previous years.
8 Segmental Reporting
The Company has one reportable segment, being
investing primarily in a portfolio of quoted UK small
companies.
9 Related Party Transactions
Under the Listing Rules, the Manager is regarded as
a related party and deemed to be Key Management Personnel of the
Company. The relationship between the Company, its Directors and
the Manager is disclosed in the Directors' Report in the Annual
Report and Accounts for the year ended 31 March 2024.
The amount charged by the Manager during the period
was £613,000 (six months to 30 September 2023:
£609,000; year to 31 March 2024: £1,104,000). At 30
September 2024, the amount due to the Manager, included in
creditors, was £300,000. The management fee is 0.50% per annum of
the gross assets of the Company, plus £50,000 per annum in respect
of acting as the AIFM.
Directors' Emoluments
At 30 September 2024, 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
£43,500, the Chair of the Audit and Management Engagement Committee
receives an annual fee of £35,000 and all other Non-Executive
Directors receive £30,000 per annum.
At 30 September 2024, the amount outstanding in
respect of Directors' fees was £nil (31 March 2024:
£nil).
At 30 September 2024, the interests of the Directors
in the ordinary shares of the Company were as follows:
|
|
As at
|
As at
|
As at
|
|
5
December 2024
|
30 September 2024
|
31 March 2024
|
|
No. of shares
|
No. of shares
|
No. of shares
|
|
Arthur
Copple
|
275,000
|
275,000
|
275,000
|
|
Catriona
Hoare
|
9,039
|
9,039
|
9,039
|
|
Yuuichiro
Nakajima
|
5,000
|
5,000
|
-
|
|
Barbara
Powley1
|
23,814
|
23,547
|
13,026
|
1 A further 267 shares were acquired by Barbara Powley on 8
November 2024 as a result of dividend reinvestment.
Montanaro UK Smaller Companies Investment Trust PLC
Registered in England and Wales No. 3004101
An investment company as defined under section 833 of the
Companies Act 2006
Directors
Arthur Copple (Chairman)
Barbara Powley (Chair of the Audit & Management
Engagement Committee and Senior Independent Director)
Catriona Hoare
Yuuichiro Nakajima (Chairman of the Nomination
& Remuneration Committee)
Principal Advisers
|
AIFM and Investment Manager
|
Depositary
|
|
MONTANARO ASSET MANAGEMENT LIMITED
|
THE BANK OF NEW YORK
MELLON
|
|
53 Threadneedle Street
|
(INTERNATIONAL) LIMITED
|
|
London EC2R 8AR
|
160 Queen Victoria Street
|
|
www.montanaro.co.uk
|
London EC4V 4LA
|
|
enquiries@montanaro.co.uk
|
|
Company Secretary and Administrator
|
Custodian
|
|
JUNIPER PARTNERS LIMITED
|
BANK OF NEW YORK MELLON SA/NV
|
|
28 Walker Street
|
160 Queen Victoria
Street
|
|
Edinburgh EH3 7HR
|
London EC4V 4LA
|
|
Tel: 0131 378 0500
|
|
|
Cosec@junipartners.com
|
|
Registered Office
|
Banker
|
|
53 Threadneedle Street
|
ING BANK N.V
|
|
London EC2R 8AR
|
London Branch
|
|
|
8-10 Moorgate
|
|
|
London EC2R 6DA
|
Registrar
|
Broker
|
|
LINK GROUP
|
CAVENDISH
|
|
Central Square,
|
One Bartholomew Close
|
|
29 Wellington Street
|
London EC1A 7BL
|
|
Leeds LS1 4DL
|
|
|
|
|
Auditor
|
Lawyers
|
|
BDO LLP
|
GOWLING WLG
|
|
55 Baker Street
|
4 More London Riverside
|
|
London W1U 7EU
|
London SE1 2AU
|
Sources of Further Information
Information on the Company, including this
Half-Yearly Report is available on the Company's website:
https://montanaro.co.uk/trust/montanaro-uk-smaller-companies-investment-trust/
Key Dates
|
February,
May, August and November
|
Quarterly
dividends payable
|
|
31
March
|
Company
year end
|
|
June
|
Annual
results
|
|
July
|
Annual
General Meeting
|
|
December
|
Half-yearly results
|
Frequency of NAV Publication
The Company's NAV is released to the LSE on a daily
basis.
ISA Status
The Company's shares are fully eligible for
inclusion in ISAs.
AIC
The Company is a member of the AIC.
NMPI Status
The Company currently conducts its affairs so that
the shares it issues can be recommended by financial advisers to
retail investors in accordance with the FCA's rules in relation to
non-mainstream investment products. It is intended to continue to
do so for the foreseeable future. The Company's securities are
excluded from the FCA's restrictions which apply to non-mainstream
investment products because they are securities in a UK listed
investment trust.
Registrar enquiries
The register for the Ordinary Shares is maintained
by Link Group. In the event of queries regarding your holding,
please contact the registrar. Calls are charged at the standard
geographic rate and will vary by provider. Calls outside the United
Kingdom will be charged at the applicable international rate. We
are open between 09:00 - 17:30, Monday to Friday excluding public
holidays in England and Wales or alternatively at shareholderenquiries@linkgroup.co.uk.
Changes of name must be notified in writing to the
registrar, whose address is: Link Group, Shareholder Services
Department, The Registry, 10th Floor, Central Square, 29 Wellington
Street, Leeds LS1 4DL. A change of address can be updated online
via www.signalshares.com.
Warning to Shareholders - Beware of Share Fraud
Fraudsters use persuasive and high-pressure tactics
to lure investors into scams. They may offer to sell shares that
turn out to be worthless or non-existent, or to buy shares at an
inflated price in return for an upfront payment. Investment scams
are often sophisticated and difficult to spot.
How to avoid investment scams:
• Reject unexpected offers: Scammers usually cold call, but
contact can also come by email, post, word of mouth or at a
seminar. If you've been offered an investment out of the blue,
chances are it's a high risk investment or a scam.
• Check the FCA Warning List: Use the FCA Warning List to check
the risks of a potential investment - you can also search to see if
the firm is known
to be operating without FCA authorisation.
• Get
impartial advice: Get impartial advice before investing - don't use
an adviser from the firm that contacted you.
You can report a firm or
scam to the Financial Conduct Authority on 0800 111 6768 or through
www.fca.org.uk/scamsmart
If you've lost money in a scam, contact Action Fraud
on 0300 123 2040 or www.actionfraud.police.uk
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.
For further information, please contact: Montanaro
Asset Management Limited Tel: 020 7448 8600
enquiries@montanaro.co.uk