REG - European Smaller Co. - Results for the half-year to 31 December 2024
20/03/2025 07:00
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RNS Number : 3686B European Smaller Companies Tst PLC 20 March 2025
Legal Entity Identifier: 213800N1B1HCQG2W4V90
THE EUROPEAN SMALLER COMPANIES TRUST PLC
Unaudited results for the half-year ended 31 December 2024
INVESTMENT OBJECTIVE
The Company seeks capital growth by investing in smaller and medium sized
companies which are quoted, domiciled, listed or have operations in Europe (ex
UK).
PERFORMANCE
Total return performance (including dividends reinvested and excluding
transaction costs)
6 months 1 year 3 years 5 years 10 years
% % % % %
NAV(1) -7.5 -1.0 -3.3 51.4 201.8
Benchmark index(2) -3.8 -1.1 -7.4 27.0 138.3
Average sector(3) NAV -3.1 1.7 -16.7 31.3 164.7
Share price(4) -1.6 8.2 5.3 63.0 235.0
Average sector(3) share price -1.0 4.3 -17.4 31.5 174.5
Financial highlights
Shareholders' funds at 31 December 2024 at 30 June 2024
Net assets (£'000) 719,345 798,594
Net asset value per ordinary share 182.66p 201.01p
Discount(5) 5.8% 11.2%
Share price 172.00p 178.40p
Gearing 13.9% 10.7%
Half-year ended Year ended
31 December 2024 30 June 2024
£'000 £'000
Total return to equity shareholders
Revenue return after taxation 3,704 21,662
Capital return after taxation (63,598) 63,236
-------------- ----------
Total return (59,894) 84,898
======== ======
Total return per ordinary share
Revenue 0.94p 5.41p
Capital (16.10p) 15.81p
-------------- ----------
Total return per ordinary share (15.16p) 21.22p
======== ======
1. Net asset value ('NAV') per ordinary share total return
2. Euromoney Smaller European Companies ex UK Index up to 30 June
2022, thereafter the MSCI Europe ex UK Small Cap Index
3. The sector is the Association of Investment Companies ('AIC')
European Smaller Companies
4. Share price total return using closing price
5. The discount is calculated using the net asset value per share and
the share price at 31 December 2024
Sources: Morningstar Direct, Janus Henderson Investors
INTERIM MANAGEMENT REPORT
Chairman's Statement
The start to my tenure as your Chairman has certainly been memorable. On 18
December 2024 the Company was requisitioned by Saba Capital Management, L.P.
('Saba') and asked to put resolutions to shareholders to replace the current,
independent Board of Directors with two individuals of Saba's choosing.
I am pleased to be able to report that shareholders made their views
absolutely clear and all requisitioned resolutions were resoundingly defeated
at the general meeting held on 5 February 2025. The Board is grateful for
the overwhelming support from shareholders, which demonstrates confidence in
the investment manager's ability to continue generating value for shareholders
through disciplined, long-term investment in European smaller companies.
A second requisition was received and subsequently withdrawn while the Board
engaged in constructive discussions with Saba. Those discussions remain
ongoing, as indicated in the announcement made to the market on 14 March
2025. I will provide an update to shareholders as soon as I am able to.
Performance
The NAV total return performance over the six months to 31 December 2024, was
-7.5%, against the MSCI Europe ex UK Small Cap Index of -3.8%. The share
price total return for the same period was -1.6%. This underperformance was
the result of our overweight exposure to the industrial sector, as a handful
of investee companies suffered substantial share price corrections. The Fund
Manager details this more fully in his report.
While this short-term underperformance is disappointing, returns over the long
term remain strong. Over the five years to 31 December 2024, the NAV total
return was 51.4% with the share price total return being 63.0%, against a
benchmark total return of 27.0%.
Discount management
The average discount over the period was 9.3%, closing at 5.8%. This
compares with the AIC European Smaller Companies sector weighted average
discount of 11.0%.
During the period your Company introduced a policy of targeting a mid-single
digit discount in normal market conditions.
Interim dividend
The Board is pleased to declare an interim dividend of 1.45p (2023: 1.45p) per
ordinary share for the year ending 30 June 2025. This will be paid on 2 May
2025 to shareholders on the register at 4 April 2025.
We remain confident that the Company will be able to deliver a healthy
dividend as the underlying portfolio companies continue to generate steady
cash flows. We may, however, not achieve the significant dividend growth of
recent years, particularly if the economy improves, as our fund management
team would likely focus on capital growth in such an environment.
Outlook
Europe remains home to the key enablers of the big structural growth trends;
these small businesses provide the nuts and bolts of innovation, along with
some fresh thinking to develop new solutions. Alongside this, the sector
also remains very attractively valued and continues to trade at the widest
discount in comparison to its European large cap counterparts than it has over
the past 15 years.
Falling interest rates, and the likelihood of further easing of monetary
policy in 2025, combined with the robust labour market, bodes well. Smaller
companies are often overlooked, even more so in a recessionary environment,
leaving the space awash with exciting companies, some breaking ground in new
areas, at very keen valuations. Our balanced investment strategy and
'valuation aware' discipline enables us to continuing finding strong
investment returns.
James Williams
Chairman
19 March 2025
Fund Manager's Report
The initial six months of the financial year concluding on 31 December 2024
have not been a period of exceptional performance for the Company, which
underperformed its benchmark by 3.7%. This shortfall can be attributed to
several factors, including suboptimal stock selection, a disproportionate
focus on companies at the lower end of the market capitalisation spectrum, and
an excessive allocation towards economically-sensitive firms, notably within
the industrial sector. Initially, the European economy seemed poised for a
resurgence. However, political uncertainties in France, a lack of decisive
action in Germany, a subdued recovery in China, and a halt in corporate
decision-making in anticipation of the US Presidential election collectively
contributed to a deteriorating global economic landscape.
Performance was negatively impacted by several holdings. DFDS, a Danish ferry
operator, experienced performance setbacks due to escalating competition in
the Mediterranean. TKH, a Dutch conglomerate specialising in industrial
automation, vision technology, and cable manufacturing, reported lacklustre
results, particularly with the delayed operational ramp-up of its new subsea
cable facility. Mersen, a French electrical technology company, encountered
uninspiring results from its solar power and silicon semiconductor divisions.
Additionally, our technology sector exposure was detrimental during this
period, with German semiconductor equipment manufacturer SUESS MicroTec and
Swiss positioning technology firm u-blox facing challenges, including customer
destocking.
Conversely, positive performance contributions emerged from select
investments. IG Group, a UK online trading platform, demonstrated exceptional
value, prompting a rare investment by the Company in UK-listed stocks, largely
due to its significant capital return to shareholders. R&S, a Swiss
manufacturer of transformers, benefited from the critical need for electrical
grid investments across the developed world. Other notable contributions
included Dutch wealth manager Van Lanschot, Spanish online travel company
eDreams ODIGEO, and Renewi, a UK-listed waste management firm with Dutch
operations, which attracted a private equity bid.
Strategic portfolio adjustments were made during this period. New investments
included Cenergy, a Greek cable and steel pipe manufacturer expanding into the
US market, and Mycronic, a Swedish electronic production equipment
manufacturer, following strong demand for its semiconductor equipment.
Additionally, investments in Bankinter, a Spanish bank, and Aixtron, a German
semiconductor equipment manufacturer, were made based on their growth
potential and strategic positioning.
Conversely, positions in Theon, Cadeler, Xior Student Housing, and Alimak were
divested due to various strategic considerations, including sector exposure
optimisation and valuation concerns.
Despite the current economic and political uncertainties, the outlook remains
cautiously optimistic. The recent German election has infused optimism across
Europe, with the new CDU Chancellor's aggressive agenda potentially
rejuvenating German equities-a market where we are significantly overweight.
Additionally, potential geopolitical developments, stimulus effects in China,
and attractive valuations in the European small-cap space present compelling
investment opportunities. Our portfolio is strategically positioned with
companies trading at significant discounts to their intrinsic value,
underscoring our commitment to maximising capital growth through judicious
investment selection.
Ollie Beckett, Rory Stokes and Julia Scheufler
19 March 2025
Sector exposure (% of portfolio excluding cash)
at 31 December 2024 at 30 June 2024
% %
Industrials 30.6 36.3
Consumer Discretionary 18.3 17.1
Financials 15.7 13.6
Technology 15.4 13.3
Basic Materials 5.6 5.0
Health Care 3.7 3.1
Consumer Staples 3.2 3.4
Real Estate 3.1 3.7
Utilities 2.2 2.0
Energy 2.1 2.0
Telecommunications 0.1 0.5
100.0 100.0
Geographical exposure (% of portfolio excluding cash)
at 31 December 2024 at 30 June 2024
% %
Germany 20.1 20.2
France 13.0 12.7
Sweden 11.5 10.9
Netherlands 11.0 11.9
Switzerland 8.7 8.2
Spain 7.0 4.9
Italy 4.3 5.3
Greece 4.0 3.1
Norway 3.9 2.9
Belgium 3.7 5.0
Denmark 3.3 4.0
United Kingdom 2.3 1.7
Ireland 2.1 2.2
Portugal 1.8 2.4
Finland 1.7 1.7
Austria 1.0 1.6
Faroe Islands 0.6 0.5
Cyprus - 0.8
100.0 100.0
Top 40 investments at 31 December 2024
Rank Company Sector Geographical area Valuation £'000 % of portfolio
1 Van Lanschot Kempen Financials Netherlands 25,355 3.1
2 TKH Industrials Netherlands 20,641 2.5
3 IG Group Financials United Kingdom 18,559 2.3
4 KSB Industrials Germany 15,534 1.9
5 SUESS MicroTec Technology Germany 14,323 1.8
6 Criteo Technology France 14,238 1.7
7 Alzchem Basic Materials Germany 14,172 1.7
8 eDreams ODIGEO Consumer Discretionary Spain 13,383 1.6
9 Renewi Utilities Netherlands 13,128 1.6
10 Stroeer Consumer Discretionary Germany 12,001 1.5
10 largest 161,334 19.7
11 Avolta Consumer Discretionary Switzerland 11,909 1.5
12 Gaztransport et Technigaz Energy France 11,856 1.4
13 R&S Group Financials Switzerland 11,819 1.4
14 Nordnet Financials Sweden 11,245 1.4
15 Credito Emiliano Financials Italy 10,587 1.3
16 IONOS Technology Germany 10,379 1.3
17 Ipsos Consumer Discretionary France 10,297 1.3
18 Acerinox Basic Materials Spain 10,250 1.2
19 Deme Industrials Belgium 10,060 1.2
20 DFDS Industrials Denmark 10,035 1.2
20 largest 269,771 32.9
21 Quadient Technology France 10,034 1.2
22 Recticel Industrials Belgium 9,659 1.2
23 Banco Comercial Portugues Financials Portugal 9,319 1.1
24 Karnov Consumer Discretionary Sweden 8,724 1.1
25 Smartcraft Technology Norway 8,430 1.0
26 Fugro Industrials Netherlands 8,313 1.0
27 Verallia Industrials France 8,272 1.0
28 Exosens Industrials France 8,087 1.0
29 Grupo Catalana Occidente Financials Spain 8,016 1.0
30 Metlen (previously Mytilineos) Industrials Greece 8,001 1.0
30 largest 356,626 43.5
31 u-blox Technology Switzerland 7,979 1.0
32 Kaufman & Broad Consumer Discretionary France 7,975 1.0
33 Andritz Industrials Austria 7,810 0.9
34 Merlin Properties Real Estate Spain 7,715 0.9
35 Eckert & Ziegler Group Basic Materials Germany 7,639 0.9
36 Trigano Consumer Discretionary France 7,570 0.9
37 Inficon Industrials Switzerland 7,386 0.9
38 Boozt Consumer Discretionary Sweden 7,305 0.9
39 Mersen Industrials France 7,193 0.9
40 Acast Technology Sweden 7,005 0.9
40 largest 432,203 52.7
Principal Risks and Uncertainties
The principal risks facing the Company are:
Investment strategy and objective
The investment objective or policy is not appropriate in the prevailing market
or sought by investors, leading to a wide discount and hostile shareholders.
Operational
Failure of, disruption to or inadequate service levels provided by principal
third-party service providers leading to a loss of shareholder value or
reputational damage. This includes cyber security risks which may compromise
the integrity of data and the effective operation of third-party service
providers.
Legal and regulatory
Loss of investment trust status, breach of the Companies Act 2006, Listing
Rules, Prospectus and/or Disclosure Guidance and Transparency Rules or the
Alternative Fund Managers Directive and/or legal action brought against the
Company and/or directors and/or the investment manager leading to a decrease
in shareholder value and reputational damage.
Financial
Market, liquidity and/or credit risk, inappropriate valuation of assets or
poor capital management leading to a loss of shareholder value.
Information on these risks and how they are managed is given in the Annual
Report 2023. In the view of the Board, these principal risks and the
uncertainties facing the Company remained largely unchanged over the six
months under review. The Board anticipates that these principal risks will
remain applicable to the remaining six months of the financial year.
Statement of Directors' Responsibilities
Each director (as set out in note 15) confirms, to the best of their
knowledge, that:
· the condensed set of financial statements has been prepared in
accordance with UK adopted International Accounting Standards and gives a true
and fair view of the assets, liabilities, financial position and profit or
loss of the Company as required by Disclosure and Transparency Rule ('DTR')
4.2.4 R;
· the interim management report includes a fair review of the
information required:
- by DTR 4.2.7 R (indication of important events during the first six
months and a description of principal risks and uncertainties for the
remaining six months of the year); and
- by DTR 4.2.8 R (disclosure of related party transactions and changes
therein).
On behalf of the Board
James Williams
Chairman
19 March 2025
Statement of Comprehensive Income
Half-year ended Half-year ended Year ended
31 December 2024 31 December 2023 30 June 2024
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
return return return return return return return return return
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Investment income 5,535 - 5,535 6,444 - 6,444 25,453 - 25,453
Other income 19 - 19 11 - 11 22 - 22
(Losses)/gains on investments held at fair value through profit or loss - (59,555) (59,555) - 31,881 31,881 - 72,040 72,040
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Total income/(loss) 5,554 (59,555) (54,001) 6,455 31,881 38,336 25,475 72,040 97,515
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Expenses
Management and performance fees (note 7) (415) (1,975) (2,390) (400) (1,602) (2,002) (833) (3,902) (4,735)
Other operating expenses (616) - (616) (402) - (402) (875) - (875)
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Profit/(loss) before finance costs and taxation 4,523 (61,530) (57,007) 5,653 30,279 35,932 23,767 68,138 91,905
Finance costs (517) (2,068) (2,585) (531) (2,129) (2,660) (1,128) (4,512) (5,640)
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Profit/(loss) before taxation 4,006 (63,598) (59,592) 5,122 28,150 33,272 22,639 63,626 86,265
Taxation (302) - (302) (370) - (370) (977) (390) (1,367)
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Profit/(loss) for the period and total comprehensive income 3,704 (63,598) (59,894) 4,752 28,150 32,902 21,662 63,236 84,898
======= ======= ======= ======= ======= ======= ======= ======= =======
Return per ordinary share - basic and diluted (note 2) 0.94p (16.10p) (15.16p) 1.19p 7.02p 8.21p 5.41p 15.81p 21.22p
======= ======= ======= ======= ======= ======= ======= ======= =======
The total column of this statement represents the Statement of Comprehensive
Income, prepared in accordance with UK adopted International Accounting
Standards. The revenue and capital return columns are supplementary to this
and are prepared under guidance published by the Association of Investment
Companies.
All items in the above statement derive from continuing operations. No
operations were acquired or discontinued during the period.
All income is attributable to the equity holders of the Company.
The Company does not have any other comprehensive income and hence the net
profit for the period as disclosed above is the same as the Company's total
comprehensive income.
The accompanying notes are an integral part of the condensed financial
statements.
Statement of Changes in Equity
Called up share Share Capital redemption reserve Other Revenue reserve Total
Half-year ended 31 December 2024 capital premium £'000 capital £'000 £'000
(unaudited) £'000 account reserves
£'000 £'000
Total equity at 1 July 2024 6,208 120,364 14,020 621,976 36,026 798,594
Total comprehensive income:
(Loss)/Profit for period - - - (63,598) 3,704 (59,894)
Transactions with owners recorded directly to equity:
Buy-back of shares for cancellation (note 3) (41) - 41 (4,720) - (4,720)
Buy-back of shares for treasury (note 3) - - - (1,448) - (1,448)
Ordinary dividends paid ‑ - - - (13,187) (13,187)
------------ ------------ ------------ ------------ ------------ ------------
Total equity at 31 December 2024 6,167 120,364 14,061 552,210 26,543 719,345
======= ======= ======= ======= ======= =======
Called up Share Capital redemption reserve Other Revenue reserve Total
Half-year ended 31 December 2023 share premium £'000 capital £'000 £'000
(unaudited) capital account reserves
£'000 £'000 £'000
Total equity at 1 July 2023 6,264 120,364 13,964 564,880 33,170 738,642
Total comprehensive income:
Profit for period - - - 28,150 4,752 32,902
Transactions with owners recorded directly to equity:
Buy-back of shares for cancellation (note 3) (9) - 9 (758) - (758)
Ordinary dividends paid - - - - (13,010) (13,010)
------------ ------------ ------------ ------------ ------------ ------------
Total equity 31 December 2023 6,255 120,364 13,973 592,272 24,912 757,776
======= ======= ======= ======= ======= =======
Year ended 30 June 2024 Called up share Share Capital redemption reserve Other Revenue reserve Total
(audited) capital premium £'000 capital £'000 £'000
£'000 account reserves
£'000 £'000
Total equity at 1 July 2023 6,264 120,364 13,964 564,880 33,170 738,642
Total comprehensive income:
Profit for the year - - - 63,236 21,662 84,898
Transactions with owners recorded directly to equity:
Buyback of shares for cancellation (note 3) (56) - 56 (6,140) - (6,140)
Ordinary dividends paid - - - - (18,806) (18,806)
------------ ------------ ------------ ------------ ------------ ------------
Total equity at 30 June 2024 6,208 120,364 14,020 621,976 36,026 798,594
======= ======= ======= ======= ======= =======
The accompanying notes are an integral part of these condensed financial
statements.
Balance Sheet
At 31 December 2024 At 31 December 2023 At 30 June 2024
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Non-current assets
Investments held at fair value through profit or loss 819,421 857,284 883,842
-------------- -------------- --------------
Current assets
Receivables 4,979 4,258 7,587
Cash and cash equivalents 459 265 232
-------------- -------------- --------------
5,438 4,523 7,819
-------------- -------------- --------------
Total assets 824,859 861,807 891,661
-------------- -------------- --------------
Current liabilities
Payables (2,123) (3,319) (2,848)
Bank overdrafts (103,391) (100,712) (90,219)
-------------- -------------- --------------
(105,514) (104,031) (93,067)
-------------- -------------- --------------
Net assets 719,345 757,776 798,594
======== ======== ========
Equity attributable to equity shareholders
Called-up share capital (note 3) 6,167 6,255 6,208
Share premium account 120,364 120,364 120,364
Capital redemption reserve 14,061 13,973 14,020
Retained earnings:
Other capital reserves 552,210 592,272 621,976
Revenue reserve 26,543 24,912 36,026
-------------- -------------- --------------
Total equity 719,345 757,776 798,594
======== ======== ========
Net asset value per ordinary share - basic and diluted (note 4) 182.66p 189.29p 201.01p
======== ======== ========
The accompanying notes are an integral part of these condensed financial
statements.
Cash Flow Statement
Half-year ended Half-year ended Year ended
31 December 2024 31 December 2023 30 June 2024
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Operating activities
(Loss)/profit before taxation (59,592) 33,272 86,265
Add back: interest payable 2,586 2,661 5,640
Add back: losses/(gains) on investments held at fair value through profit or 59,555 (31,881) (72,040)
loss
Sales of investments held at fair value through profit or loss 154,286 148,244 362,971
Purchases of investments held at fair value through profit or loss (151,920) (137,180) (340,283)
Decrease/(increase) in prepayments and accrued income 1,519 1,228 (195)
Decrease in amounts due from brokers 816 2,023 291
Decrease in accruals and deferred income (195) (7,107) (7,622)
(Decrease)/increase in amounts due to brokers (545) (69) 81
------------ ------------ ------------
Net cash inflow from operating activities before interest and taxation 6,510 11,191 35,108
------------ ------------ ------------
Interest paid (2,571) (2,577) (5,663)
Taxation on investment income (29) (556) (1,726)
------------ ------------ ------------
Net cash inflow from operating activities 3,910 8,058 27,719
------------ ------------ ------------
Financing activities
Equity dividends paid (net of refund of unclaimed dividends) (13,187) (13,010) (18,806)
Share buy-backs (6,168) (758) (6,140)
Net drawdown/(repayment) of bank overdraft 15,672 5,973 (2,543)
------------ ------------ ------------
Net cash outflow from financing (3,683) (7,795) (27,489)
------------ ------------ ------------
Increase in cash and cash equivalents 227 263 230
Cash and cash equivalents at the start of the period 232 2 2
------------ ------------ ------------
Cash and cash equivalents at the period end 459 265 232
======= ======= =======
The accompanying notes are an integral part of these condensed financial
statements.
Notes to the condensed financial statements
1. Accounting policies
a) Basis of preparation
The condensed financial statements comprise the unaudited results of the
Company for the half-year ended 31 December 2024. They have been prepared on
a going concern basis and in accordance with UK adopted International
Accounting Standards and with the Statement of Recommended Practice 'Financial
Statements of Investment Trust Companies and Venture Capital Trusts' ('SORP'),
issued in July 2022 where the SORP is consistent with the requirements of UK
adopted International Accounting Standards.
For the period under review, the Company's accounting policies have not varied
from those described in the annual report for the year ended 30 June 2024.
These financial statements have not been audited or reviewed by the Company's
auditors.
2. Return per ordinary share
The return per ordinary share is based on the loss for the half-year of
£59,894,000 (half-year ended 31 December 2023: profit of £32,902,000; year
ended 30 June 2024: profit of £84,898,000) and on 395,136,083 ordinary shares
(half-year ended 31 December 2023: 400,667,457 and year ended 30 June 2024:
400,039,178), being the weighted average number of ordinary shares in issue
during the period.
The return per ordinary share detailed above can be further analysed between
revenue and capital, as below.
Half-year ended Half-year ended Year ended
31 December 2024 31 December 2023 30 June 2024
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Net revenue profit 3,704 4,752 21,662
Net capital (loss)/profit (63,598) 28,150 63,236
---------- ---------- ----------
Net (loss)/profit (59,894) 32,902 84,898
====== ====== ======
Weighted average number of ordinary shares in issue during the period 395,136,083 400,667,457 400,039,178
Half-year ended Half-year ended Year ended
31 December 2024 31 December 2023 30 June 2024
(unaudited) (unaudited) (audited)
Pence pence pence
Revenue return per ordinary share 0.94 1.19 5.41
Capital return per ordinary share (16.10) 7.02 15.81
---------- ---------- ----------
Total return per ordinary share (15.16) 8.21 21.22
====== ====== ======
3. Share capital
At 31 December 2024 there were 393,815,298 ordinary shares in issue (31
December 2023: 400,321,188 and 30 June 2024: 397,287,598).
During the half-year ended 31 December 2024, the Company repurchased 2,655,272
ordinary shares for cancellation, at a total cost of £4,720,000 and
repurchased 817,028 ordinary shares for treasury, at a total cost of
£1,448,000 (31 December 2023: 545,988 ordinary shares for cancellation, at a
total cost of £758,000 and 30 June 2024: 3,579,578 ordinary shares for
cancellation, at a total cost of £6,140,000). No ordinary shares were issued
(31 December 2023 and 30 June 2024: same).
4. Net asset value per ordinary share
The net asset value per ordinary share is based on the net assets attributable
to equity shareholders of £719,345,000 (31 December 2023: £757,776,000; 30
June 2024: £798,594,000) and on 393,815,298 ordinary shares (31 December
2023: 400,321,188; 30 June 2024: 397,287,598), being the number of ordinary
shares in issue at the period end.
5. Dividends
The Company has declared an interim dividend of 1.45p per ordinary share (31
December 2023: 1.45p) payable on 2 May 2025 to members on the register as at 4
April 2025. The shares will trade ex-dividend on 3 April 2025.
A final dividend of 3.35p per ordinary share was paid on 29 November 2024 from
the Company's revenue account in respect of the year ended 30 June 2024.
6. Transaction costs
Purchase transaction costs for the half-year ended 31 December 2024 were
£199,000 (half-year ended 31 December 2023: £130,000; year ended 30 June
2024: £381,000). These comprise mainly stamp duty and commission. Sales
transaction costs for the half-year ended 31 December 2024 were £63,000
(half-year ended 31 December 2023: £69,000; year ended 30 June 2024:
£159,000).
7. Management and performance fees
The base management fee payable to the Manager is 0.55% of net assets up to
£800m, reducing to 0.45% thereafter. Fees are charged quarterly in arrears.
The investment manager may also be eligible to receive a performance-related
fee. In order to determine whether a performance fee is payable, performance
is measured against, and expressed relative to, the benchmark, the MSCI Europe
ex UK Small Cap Index expressed in Sterling. Performance of both the Company
and the benchmark is measured on a NAV total return (with gross income
reinvested) basis and is measured over three years. For the purpose of the
performance fee calculation, performance prior to 1 July 2022 is based on the
Company's former benchmark, the Euromoney Smaller European Companies (ex UK)
Index expressed in sterling.
In any given year in which a performance fee is payable, the performance fee
rate is 15% of the positive difference between the average annual NAV total
return and the average annual total return of the benchmark. The upper limit
on the total fee, including the base fee and any performance fee, for any
given accounting year is 2.0% of the Company's NAV as at the last day of the
relevant calculation period. A performance fee hurdle over the benchmark of
1.0% has to be reached before any performance fee can be earned. For clarity,
performance is measured solely on the basis of NAV total return relative to
the total return of the benchmark index; no account is taken of whether the
NAV grows or shrinks in absolute terms. Any performance fee payable is
allocated to capital.
A performance fee of £315,000 has been accrued as at 31 December 2024 (31
December 2023: £nil; 30 June 2024: £569,000).
8. Financial instruments
At the period end the carrying value of financial assets and financial
liabilities approximates their fair value.
Fair value hierarchy
The table below analyses recurring fair value measurements for financial
assets and financial liabilities. These fair value measurements are
categorised into different levels in the fair value hierarchy based on the
inputs to valuation techniques used. Categorisation within the hierarchy has
been determined on the basis of the lowest level of input that is significant
to the fair value measurement of the relevant asset or liability. The
different levels are defined as follows:
Level 1: valued using quoted prices in active markets for identical
assets;
Level 2: valued by reference to valuation techniques using observable
inputs other than quoted prices included within Level 1; and
Level 3: valued by reference to valuation techniques that are not based on
observable market data.
Financial assets and financial liabilities at fair value Level 1 Level 2 Level 3 Total
through profit or loss at 31 December 2024 £'000 £'000 £'000 £'000
Investments at fair value through profit or loss 819,421 - - 819,421
------------ ---------- ----------- ------------
Total financial assets and liabilities carried 819,421 - - 819,421
at fair value
======= ====== ====== =======
There were no transfers between levels of fair value hierarchy during the
period. Transfers between levels of fair value hierarchy are deemed to have
occurred at the date of the event or through a change in circumstances that
caused the transfer.
9. Going concern
Having reassessed the principal risks and uncertainties facing the Company,
the directors consider that it is appropriate to continue to adopt the going
concern basis of preparation and confirm that there are no material
uncertainties of which they are aware. The assets of the Company consist
mainly of securities, most of which are realisable and, accordingly, the
Company has adequate financial resources to continue in operational existence
for at least twelve months from the date of approval of the financial
statements.
10. Related party transactions
The Company's transactions with related parties in the period were with the
directors and the investment manager. There were no material transactions
between the Company and its directors during the period and the only amounts
paid to the directors were in respect of expenses and remuneration for which
there were no outstanding amounts payable at the period end. In relation to
the provision of services by the investment manager, other than fees payable
by the Company in the ordinary course of business and the facilitation of
marketing activities with third parties, there were no material transactions
with the investment manager affecting the financial position of the Company
during the period under review.
11. Comparative information
The financial information contained in this half-year report does not
constitute statutory accounts as defined in section 434 of the Companies Act
2006. The financial information for the half-years ended 31 December 2024 and
31 December 2023 has not been audited or reviewed by the Company's auditors.
The figures and financial information for the year ended 30 June 2024 are an
extract based on the latest published accounts and do not constitute statutory
accounts for that year. Those accounts have been delivered to the Registrar of
Companies and include the Independent Auditor's Report which was unqualified
and did not contain a statement under either section 498(2) or 498(3) of the
Companies Act 2006.
12. Website
Details of the Company's share price and net asset value, together with
general information about the Company, monthly factsheets and data,
announcements, reports and details of general meetings can be found at
www.europeansmallercompaniestrust.com
(http://www.europeansmallercompaniestrust.com)
13. Half-year report
The Company's half-year report and a summary extract is available on the
Company's website. The summary extract will be posted to shareholders in March
2025.
14. Company status
The European Smaller Companies Trust PLC is registered in England and Wales,
No. 2520734, has its registered office at 201 Bishopsgate, London EC2M 3AE and
is listed on the London Stock Exchange.
SEDOL/ISIN: BMCF868/GB00BMCF8689
London Stock Exchange (TIDM) code: ESCT
Global Intermediary Identification Number (GIIN): JX9KYH.99999.SL.826
Legal Entity Identifier (LEI): 213800N1B1HCQG2W4V90
15. Directors and Secretary
At the date of this report, the directors of the Company are James Williams
(Chairman), Daniel Burgess (Chairman of the Audit Committee), Ann Grevelius
and Simona Heidempergher (Senior Independent Director). The Corporate
Secretary is Janus Henderson Secretarial Services UK Limited.
For further information please contact:
Ollie Beckett, Fund Manager Harriet Hall, PR Director, Investment Trusts
The European Smaller Companies Trust PLC Janus Henderson Investors
Telephone: 020 7818 4331 Telephone: 020 7818 2919
Neither the contents of the Company's website nor the contents of any website
accessible from hyperlinks on the Company's website (or any other website) are
incorporated into, or form part of, this announcement.
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