REG - Montanaro UK SmlrCos - Final Results
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RNS Number : 0514N Montanaro UK Smlr Cos Inv Tst PLC 17 June 2025
Montanaro UK Smaller Companies Investment Trust PLC
213800UDDXXTXIF29P85
Final Results
2025 Annual Results and notice of annual general meeting
Montanaro UK Smaller Companies Investment Trust PLC (or the 'Company')
announces its annual results for the year ended 31 March 2025 and the
publication of its annual report and accounts for the same period, which
includes the notice of its 2025 annual general meeting.
Highlights
for the year ended 31 March 2025
Performance
Total Returns 1 year 3 year 5 year 10 year Since launch
Share Price(1) 1.0% (10.8%) 20.3% 52.3% 854.0%
Net Asset Value ("NAV") per share (1) (6.9%) (11.4%) 14.3% 30.4% 808.6%
Benchmark(2) 2.3% 2.7% 68.2% 60.3% 570.6%
Benchmark (including AIM)(3) (0.4%) (11.1%) 49.0% 47.7% 477.9%
Sources: Deutsche Numis, Bloomberg, Association of Investment Companies
("AIC"), Montanaro Asset Management Limited ("MAM").
As at 31 March 2025 2024 % Change
Ordinary share price 97.00p 101.00p (4.0)
NAV per Ordinary share(1) 105.86p 118.94p (11.0)
Discount to NAV(1) 8.4% 15.1%
Gross assets(1) £163.3m £219.1m (25.5)
Net assets £150.8m £199.1m (24.3)
Market Capitalisation £138.2m £169.1m (18.3)
Net gearing employed(1) 5.2% 2.7%
Year ended 31 March 2025 2024 % Change
Revenue return per Ordinary share 3.3p 3.2p 3.1
Dividends per Ordinary share 5.4p 4.6p 17.4
Ongoing charges(1) 0.9% 0.9%
Portfolio turnover(1) 45.6% 23.4%
1 Details provided in Alternative Performance Measures on pages 64 to 65 of
the Annual Report.
2 The Benchmark is a composite index with the NSCI used since 1 April 2013.
3 This represents the Benchmark with the NSCI including AIM used since 1 April
2013.
How to Invest
The Board has dedicated a great deal of time to make MUSCIT readily available
to all investors. MUSCIT has continued to grow its presence across the UK's
investment platforms. We are delighted to see a steady increase in MUSCIT's
retail following.
For further details about how to invest, please refer to the website:
https://montanaro.co.uk/trust/montanaro-uksmaller-companies-investment-trust/
(https://montanaro.co.uk/trust/montanaro-uksmaller-companies-investment-trust/)
Chairman's Statement
I am pleased to present the annual report of MUSCIT for the year ended 31
March 2025. This year also marks MUSCIT's 30th anniversary.
Results
In the year to 31 March 2025, the Net Asset Value ("NAV") of MUSCIT decreased
by 6.9%. In comparison, the Numis Smaller Companies Index (excluding
investment companies) (the "NSCI") gained 2.3% and the NSCI including AIM
decreased by 0.4%.
During the same period, the share price of MUSCIT returned 1.0% as the
discount tightened from 15.1% to 8.4%. Compared with the NSCI including AIM,
MUSCIT's Share Price outperformed by 1.4%.
Since inception in 1995, the Company has delivered a cumulative NAV total
return of 809%, significantly outperforming the composite benchmark which
delivered a return of 571%.
Dividends
The Board believes it is important that the Company's dividend policy
continues to play a key role in attracting new investors and, in doing so,
helps to narrow the discount.
While the Company's primary investment objective and focus remain capital
growth - and this has not changed - the Board recognised the evolving interest
rate environment.
In December 2024, the quarterly dividend was increased from 1% to 1.5% of the
Company's NAV, equivalent to an annual yield of approximately 6%.
Based on the current discount of 8.4%, this implies a share price yield of
6.5%. This would place MUSCIT in the top 10 highest-yielding UK equity trusts
out of over 400 and one of only seven strategies offering yields in excess of
6% (Source: Quoted Data).
Quarterly dividends continue to be calculated on the NAV on the last business
day of the preceding financial quarter, being the end of March, June,
September and December.
During the Financial Year, the Company paid four quarterly dividends amounting
to a total of 5.43p per share, equivalent to 5.4% of the share price at the
start of the year and 5.6% at the end of the period.
The Company holds substantial reserves which are available for distribution in
future.
Costs
The Board remains highly focused on reviewing and managing costs. Effective
from 31 December 2024, the investment management fee of 0.50% per annum is now
calculated based on net assets rather than gross assets. The fee remains one
of the most competitive within the UK SmallCap investment trust sector.
In addition, the Board conducts regular reviews of all service providers to
ensure that fees remain competitive and at least aligned with market
standards.
We are pleased to report that the Company's Ongoing Charge has remained stable
at 0.9%, despite a decrease in net assets during the Financial Year.
Share Buybacks
The Board is responsible for share buy-backs which are undertaken at arms'
length from the Manager. These are regularly considered by the Board and
implemented when considered to be in the interests of shareholders as a whole.
In recognition of changing market dynamics, the Board confirmed its commitment
to an active buyback policy, with the view to maintaining the discount in
single digits in normal market conditions.
The share buyback authority was renewed at a General Meeting held on 31 March
2025.
During the financial year, the Company bought back 24,927,148 shares (14.9% of
outstanding shares) which are held in Treasury.
In addition, during the life of MUSCIT, the Company has bought back and
cancelled 29% of the shares outstanding.
Discount
Over the last financial year, the discount of MUSCIT's share price to NAV, as
shown in the graph on page 4 of the Annual Report, narrowed from 15.1% to
8.4%.
The Board and the Manager have worked hard to make MUSCIT attractive to
private clients, including implementing a five-for-one share split in 2018;
twice enhancing its dividend policy; reducing costs and increasing the focus
on marketing. These initiatives are bearing fruit, with a growing number of
retail investors now appearing on the share register. Over time, this broader
ownership base should help to reduce discount volatility in MUSCIT's shares.
Gearing
The Board, in consultation with the Manager, regularly reviews the gearing
strategy of the Company and it approves the arrangement of any gearing
facility. The ability to issue debt to gear the portfolio is a key feature of
investment trusts that we believe offers a strong competitive advantage over
open‑ended investment funds. Gearing can enhance investment returns to
shareholders. The Board strongly encourages the Manager to actively use the
gearing facility while delegating the decision on optimum levels to their
discretion.
On 17 December 2024, the borrowing facilities were renewed with BNY Mellon for
a period of two years. The interest rate on the £30 million revolving credit
facility is calculated as the prevailing SONIA rate plus 1.3% (the bank
margin).
At 31 March 2025, net gearing was 5.2%, a level that the Manager considered to
be appropriate in light of the macroeconomic uncertainty and volatility in
financial markets at that time.
Environmental, Social and Corporate Governance ("ESG")
The Board and Montanaro believe there is a strong correlation between how well
a business fares on ESG grounds and the value it creates for its shareholders.
This is why ESG considerations form an integral part of the Manager's
assessment of a company's "Quality" and have been fully integrated into the
investment process for many years.
The depth of Montanaro's commitment is perhaps best exemplified by the fact
that they are one of the few UK asset managers to be a certified B Corporation
- a certification Montanaro have held since 2019. Certified B Corporations are
businesses that meet the highest standards of verified social and
environmental performance, public transparency and legal accountability to
balance profit and purpose. The certification was renewed for a further three
years in 2022. Montanaro's score rose from 81.8 to 105.5 (classified as
"outstanding"), demonstrating their commitment to continual improvement.
An ESG Report is included on pages 7 to 8 of the Annual Report.
AGM
The Annual General Meeting will be held on Wednesday, 23 July 2025 at 10 a.m.
at the office of Montanaro Asset Management, 53 Threadneedle Street, London
EC2R 8AR. Shareholders are warmly invited to attend the Meeting where, after
the formal business has been concluded, there will be an opportunity to meet
and ask questions of the Board and the Manager.
Continuation Vote
The next Continuation Vote is scheduled to be held in 2027.
At the AGM held on 12 August 2021, over 99% of shareholders voted in favour of
continuation of the Company for a further five years.
Directors' Fees
In light of the adjustments to the investment management fee and reduced NAV
of the Company, the Board has agreed to reduce Directors' remuneration by 10%
from 1 April 2025. This decision reflects the Board's commitment to managing
the Company's costs. Directors are encouraged to invest a proportion of their
remuneration in shares of the Company. We will continue to review remuneration
levels to ensure they remain appropriate and competitive within our peer
group.
Outlook
The financial year to 31 March 2025 was shaped by considerable turbulence,
both in international relations and financial markets. The re-election of
Donald Trump and the announcement of sweeping tariffs - dubbed "Liberation
Day" measures - shocked the global economy, heightening volatility and
damaging investor confidence. These developments have added considerable
uncertainty to the global outlook and are reshaping established trading
relationships in ways that are still unfolding.
Closer to home, the UK faced its own challenges. The Budget announcements in
November 2024 and again in March 2025 were generally poorly received by the
business community, with tax and minimum wage increases viewed as
disappointing. These measures weighed on domestic sentiment and contributed to
a difficult environment for UK smaller companies in particular. Growth
companies faced the additional headwind of rising bond yields.
Nonetheless, as we look ahead, there are reasons for cautious optimism. Recent
data show that UK GDP growth in Q1 2025 outperformed expectations, while
inflation has come in below forecast. As a result, investor sentiment towards
UK equities is perhaps beginning to improve from deeply depressed levels.
Furthermore, early signs suggest that a potential 'brain drain' from US
universities - as international academics and students look elsewhere - could
benefit the UK's world-leading higher education sector and, over time, the
broader economy. UK equity valuations - particularly among smaller companies -
are close to generational lows compared to other major markets, while global
investor allocations to UK equities remain exceptionally low. A combination of
attractive valuations and improving sentiment could set the stage for a
meaningful reappraisal of UK equities in the years ahead.
Against this backdrop, we remain confident that our portfolio of high-quality,
resilient smaller companies - of which the overwhelming majority are
unaffected by trade tariffs - offers attractive opportunities for long-term
investors.
The Board and the Manager remain focused on delivering strong, sustainable
returns while managing risk carefully in what continues to be an evolving and
unpredictable environment.
ARTHUR COPPLE
Chairman
16 June 2025
Manager's Report
The Attractions of Quoted UK Smaller Companies ("UK SmallCap")
The key attraction of investing in quoted smaller companies is their long-term
record of delivering higher returns to investors than large companies. In the
UK, over the last 70 years, this has amounted to an average of 3.1% per annum
(the "SmallCap Effect").
£1 invested in UK large companies in 1954 would now be worth £1,530 whereas
the same £1 invested in UK smaller companies would now be worth £10,040 -
almost seven times more.
The market for UK smaller companies is inefficient. While some large companies
are analysed by more than 50 brokers, many smaller companies have little or no
coverage. We believe that this makes it easier for those with a high level of
internal resources to identify attractive, undervalued and overlooked
investment opportunities. This in turn makes it possible to deliver long-term
performance over and above that of the benchmark.
Montanaro Asset Management
Montanaro was established in 1991. We have one of the largest and most
experienced specialist teams in the UK dedicated exclusively to researching
and investing in quoted smaller companies. Our team of 37 includes 11
nationalities and 16 Analysts and Portfolio Managers, which gives us the
breadth of resources to conduct thorough in-house research.
At 31 March 2025, we were looking after around £3 billion of client assets.
Investment Philosophy and Approach
We specialise in researching and investing in quoted smaller companies.
We have a disciplined, two-stage investment process. Firstly, we identify
"good businesses" within our investable universe. In the second stage, we
determine the intrinsic value of each company to ensure they will make a "good
investment" (the two are not always the same).
When we consider that we have identified a potentially "good" company, it must
pass our stringent Quality and ESG Checklists and be approved by our
Investment Committee before it can be added to our "Approved List". ESG has
been integrated within our disciplined investment process for almost three
decades. Only the most attractive companies make it on to the Approved List
and it is from these that we construct your portfolio.
Our in-house team of Analysts are sector specialists and one of the largest
specialist teams in the country. Utilising their industry knowledge and a
range of proprietary screens, they are continually searching for new ideas.
With around 1,600 quoted companies in the UK to choose from, we are spoiled
for choice.
We look for high quality companies in markets that are structurally growing
and simple to understand. They must be profitable; have good and experienced
management; deliver sustainably high returns on capital employed; enjoy high
and ideally growing profit margins reflecting pricing power and a strong
market position; and provide goods and services that are in demand and likely
to remain so. We like focused companies that are well-established with a long
history so that we can see how they perform over different cycles. Ideally,
they should deliver self-funded organic growth rather than rely on
acquisitions and stick firmly to their core areas of expertise.
Conversely, we avoid those with stretched balance sheets; poor free cash flow
generation; incomprehensible or heavily adjusted accounts; unproven or
unreliable management; structurally challenged business models with stiff
competition; and "special situations" or recovery companies.
We believe that a deep understanding of a company's business model and the way
it is managed are essential. We meet or speak to our investee companies on a
regular basis, typically after they announce their semi-annual or annual
figures. Site visits are particularly useful. They allow us to meet management
in situ when they can give us more time and we can talk to more people.
Investing in small companies is all about meeting the executive team. It is a
privilege for us and where we can add most value.
Management's past track record is examined in detail as we seek to understand
their goals and aspirations. In smaller companies, the decisions of management
can make or break a company (which is why meeting them is so important). We
look closely at the board structure; the level of insider ownership; and
carefully examine remuneration and corporate governance policies.
Once a company has been added to the portfolio, our Analysts conduct ongoing
reviews. We will sell a holding if we believe that the company's underlying
quality is deteriorating or if there has been a fundamental change to the
investment case or indeed management. We will get things wrong and make
mistakes, but we try to learn from them.
In summary, we invest in well managed, focused, high quality, growing
companies bought at sensible valuations.
We keep turnover and transaction costs low and follow our companies closely
over many years. We would rather pay more for a higher quality, more
predictable company that can be valued with greater certainty.
Environmental, Social and Governance ("ESG")
Montanaro became a certified B Corporation in 2019, placing sustainability at
its core. This was achieved by meeting verified standards of social and
environmental performance, transparency and accountability. It is regarded as
one of the toughest sustainability standards to achieve globally. Montanaro
recertified for "B Corp" status in 2022 and achieved a score of 105.5, well
above the 81.8 originally achieved in 2019 and an achievement of which we are
proud.
Montanaro has a long track record of sustainable investing which has always
been reflected in the way the portfolio has been managed. Ethical restrictions
mean that we do not invest in companies that generate a significant proportion
of sales from products with negative societal impact such as tobacco,
gambling, alcohol, high-interest-rate lending and fossil fuels. Similarly, we
do not invest in companies that conduct animal testing, unless it is required
by law for healthcare or regulatory purposes.
The analysis of ESG factors has long formed part of our definition of a
company's "Quality". The analysis of such information allows us to better
understand the risks - and opportunities - that our companies may be exposed
to, from factors such as climate change, supply chain risks and the structure
of company boards.
MUSCIT was awarded an 'AA' rating for its ESG credentials by MSCI - the second
best rating out of a possible seven - placing it among the highest-rated funds
in its category.
In March 2022, Montanaro won "the Best Small & Mid-Cap Sustainable
Investment Boutique" award from Ethical Finance. This recognised Montanaro's
continuing commitment to sustainable investing within its own business, across
the investment industry and in our investment process. We were delighted to
receive this award again in 2024.
Examples of Recent Investee Company Engagement
We continued our active engagement with portfolio companies over the past
year, focusing on areas such as environmental transparency, executive pay, and
sustainability reporting.
As part of the 2024 CDP Non-Disclosure Campaign, we engaged with Hilton Foods
to discuss how they could improve their environmental reporting. In previous
years, the company had not responded to CDP requests for disclosure. Our
discussions were constructive as always. Subsequently, they completed all
three CDP questionnaires covering climate change, water security and
deforestation. This marks a significant step forward and shows the company's
growing commitment to sustainability and investor transparency.
We took part in a shareholder consultation with discoverIE regarding proposed
changes to its executive pay structure, including increases to
performance-based long-term incentives. Our engagement focused on ensuring a
clear link between reward and long-term value creation. The company provided
reassurance on how performance metrics were being designed to align with
shareholder interests. After a thorough review, we voted in favour of the
proposals at the AGM.
How to Invest
We have dedicated a great deal of time to make MUSCIT readily available to all
investors. We have continued to grow our presence across the UK's investment
platforms and are delighted to see a steady increase, year after year, in
MUSCIT's retail following.
Together with the Board, we have appointed Marten & Co to provide
sponsored research. The latest report published in May 2025 is available here:
https://quoteddata.com/research/montanaro-uk-smaller-companies-high-growth-bigger-yield-mc/
(https://quoteddata.com/research/montanaro-uk-smaller-companies-high-growth-bigger-yield-mc/)
For further details about how to invest, please refer to the following
website:
https://montanaro.co.uk/trust/montanaro-uk-smaller-companies-investment-trust/
(https://montanaro.co.uk/trust/montanaro-uk-smaller-companies-investment-trust/)
The Portfolio
On 31 March 2025, the portfolio consisted of 40 companies of which the top ten
holdings represented 41% (2024: 46%) of the portfolio by value. MUSCIT held 8
companies traded on AIM representing 16% of the Portfolio by value (2024:
21%).
Sector distribution within the portfolio is driven by stock selection.
Although weightings relative to the market are monitored, overweight and
underweight positions are held based on where the greatest value and upside
are perceived to be.
Gearing
The Board is responsible for setting the Company's gearing strategy and
approves the arrangement of any borrowing facilities. The Manager is
responsible for determining the gearing level within parameters set by the
Board. On 31 March 2025, gearing stood at 5.2%.
Performance Review
In the year ended 31 March 2025, the NAV decreased by 6.9% in comparison with
the benchmark gain of 2.3%. Including AIM, the benchmark was flat. Style
proved a headwind: Growth underperformed Value by 8% last year, accounting for
the underperformance.
During this period, the share price of MUSCIT returned 1.0% as the discount
narrowed from 15.1% to 8.4%. Compared with the NSCI including AIM, MUSCIT's
share price outperformed by 1.4%.
Since its launch in March 1995, MUSCIT has delivered an average annualised NAV
return of 7.6% p.a. (including dividends reinvested), outperforming the
composite benchmark by 1.1% p.a.. This is a cumulative NAV total return of
809%, significantly outperforming the composite benchmark return of 571%.
Performance Attribution
The largest positive contributors over the period were:
XPS Pensions, a leading provider of pension administration and consulting
services, continued its strong run. Demand for expert advice remains high
following the LDI crisis caused by Liz Truss's mini-budget in September 2022.
The group has been gaining market share through new client wins and awards.
This is the second year in a row that XPS has been among our top performers.
Games Workshop, the fantasy miniatures company behind Warhammer, delivered
impressive results once again. A growing global fanbase, successful new
product launches, and expanding royalty income from licensing deals -
including with Amazon - all contributed to investor enthusiasm. The business
remains highly profitable and cash generative with a strong dividend track
record.
Raspberry Pi, a Cambridge-based semiconductor company and educational
computing pioneer, made a successful debut on the London Stock Exchange. We
participated in the IPO (see below). Early trading has been encouraging and in
line with market expectations.
As ever, the year was not without some disappointments. The largest detractors
were:
Tracsis, a provider of software and services to the transport industry, saw
its shares weaken after failing to secure any large train orders in America
that had been anticipated. At the time of writing, the shares are trading on
c.11x forward earnings, which suggests to us that the news has been fully
discounted by the market. The share price has been quietly rallying since the
end of the financial year.
4imprint, the direct marketer of promotional products in the US, gave back
some of its previous strong gains. As most of their products are sourced from
China, investors became concerned about the impact of trade tariffs and the
likelihood of price increases that might result. One of our top performers
last year, 4imprint remains a core holding and has one of the best management
teams we have the privilege to know.
YouGov, the international market research and data analytics company, issued a
profit warning following operational missteps, including delayed project
delivery and cost overruns. So soon after a large acquisition, management
credibility was sufficiently in doubt that we sold the holding. Subsequently,
the Chief Executive stood down.
Case Study - Raspberry Pi
This year saw us participate in the IPO of Raspberry Pi - our first for MUSCIT
since Auction Technology Group in February 2021. IPOs are rare for us. We
prefer companies with a long track record on the public market, not least
because listing is a gruelling process. The obligations once public are
considerable. Add in fund managers like us asking endless (and probably quite
annoying) questions and you can understand why some founders choose to stay
private.
But we do like a good prospectus. The trick, as ever, is to read it from the
back - litigation, accounting adjustments, related party transactions, etc.
are all buried at the end. Most don't have the stamina to read every page to
the last. We do.
In 2024, just 17 companies came to market in the UK - down 96% from the 2005
peak. But this could not go on. Private equity needed exits. Bankers needed
bonuses. The London Stock Exchange needed a win. Step forward: Raspberry Pi.
Founded in Cambridge, Raspberry Pi began as an educational charity to inspire
the next generation of computer programmers. Eben Upton and colleagues
launched the first credit card-sized computer boards in 2012, priced at under
£15, hoping schools would use them to teach coding. They caught on fast:
first with kids and hobbyists; later with engineers and OEMs. Today, Raspberry
Pi is a global business selling into both education and industry.
The IPO prospectus was one of the cleanest I have ever read. It passed the key
tests: management were not selling a single share (always "follow the money");
they retained a meaningful 5% stake; they had impressive backers such as ARM
and Lansdowne who were cornerstone investors; Sony Semiconductor was already
involved. Most importantly, the main seller was the Raspberry Pi Foundation -
not private equity - and proceeds would continue to support its charitable
mission.
The company ticked every MUSCIT box: c.£500 million market cap (too small for
the index-huggers and big institutions), profitable and growing fast. From
2021 to 2023, revenues rose by over 90% and operating profits had more than
doubled. We had a long meeting with management who are passionate, open and
trustworthy. We felt it would be priced attractively. There were too many
people who had a vested interest in a successful outcome.
The IPO was around 10 times oversubscribed. Half the institutions walked away
empty handed. Fortunately, we received an allocation which we quickly
increased to our target weight. Raspberry Pi listed at £2.80 on 10 June 2024
and has since more than doubled. Such successes are rare but in this instance
all the stars were aligned. A founder-led, mission-driven, profitable UK
technology company, backed by long-term sophisticated investors built for the
long term at a time when the London Stock Exchange needed something to shout
about.
There is a postscript. Whilst reading the prospectus, I spotted a familiar
name: David Braben, one of the co-founders, is also Chairman of Frontier
Developments, a company we've known for many years. I gave him a call. As
ever, some of the most valuable insights come not from broker notes,
prospectuses or roadshows but rather from relationships built over decades.
This is what UK SmallCap is all about. Raspberry Pi reminds us why it is so
exciting and rewarding.
Outlook
UK equities as a whole are trading at just 12x earnings, one of the cheapest
global stock markets. UK SmallCap is even cheaper, languishing at around 10x
depressed profits.
For long-term investors, this has the hallmarks of a generational buying
opportunity.
We are not alone in this view. Around the world, the investment community is
reassessing its exposure to Wall Street. The return of Donald Trump and
"Liberation Day" politics have reignited concerns around deficits, US dollar
stability and the sustainability of the dominance and so called "excellence"
of America. Is it still a reliable trading partner? It may no longer be the
obvious safe haven for investors - Wall Street underperformed the rest of the
world by 10.5% in the first quarter of 2025, the most in 23 years. This is
remarkable and may signal a change in the world order never seen before in our
lifetime. As the risk premium on US equities rises, capital is beginning to
search for alternative homes. The UK is on the radar once again.
Consensus earnings for UK SmallCap companies forecast a rise of over 17% in
2025, outpacing larger peers by some margin. The combination of a valuation
discount and an improving earnings outlook bodes well. Currently, UK smaller
companies are unloved and under-owned. Over the past thirty years, we have
seen sentiment change dramatically almost overnight - March 2003 and March
2009 come to mind - which heralded several years of strong returns. It pays to
remain patient and keep the faith.
CHARLES MONTANARO
16 June 2025
Top 10 Holdings
as at 31 March 2025
1. discoverIE - A global electronics group designing customised
components for industrial applications. Its high-margin, design-led model and
exposure to structural growth markets such as renewables and automation make
it a compelling long-term compounder.
2. XPS Pensions - A leader in pension consultancy and administration,
XPS is well positioned to grow as regulation drives demand for independent,
expert advice. Its scalable model and market share gains support long-term,
structural growth. XPS won the John Lewis Pension Fund last year with 165,000
members, the largest in the company's history.
3. Big Yellow - Big Yellow is the UK's leading self-storage provider
with over 100 stores nationwide and a focus on London and the South East.
Demand is driven by decluttering, moving, home improvements, student storage,
travel, business needs and life events ("death, divorce and downsizing").
Since listing in 2000, it has achieved consistent earnings and dividend growth
with annualised total shareholder returns of 13.6%.
4. Hilton Foods - A global food packaging business partnering with
leading supermarkets such as Tesco, Woolworths (Australia) and the Co-op.
Innovation in sustainable packaging and plant-based products, plus geographic
expansion such as in Saudi Arabia, support strong growth. Walmart have just
announced a $6.5 billion landmark investment in Canada where they will be
working with Hilton Foods.
5. Telecom Plus - Trading as Utility Warehouse, TelecomPlus bundles
energy, broadband, mobile and insurance into a one-stop shop proposition. Its
unique referral model fuels customer growth, with rising energy costs
enhancing its relative value proposition. It has over one million customers in
the UK.
6. Baltic Classifieds - BCG are the dominant classifieds business in
the Baltics, operating 14 online portals across autos, real estate, jobs,
services and generalist verticals. High margins and pricing power, strong
network effects and digital transition underpin its exceptional profitability
and scalability. Each resident in the Baltics, on average, visits BCG sites 10
times per month
7. Porvair - Specialising in filtration for environmental and
industrial markets, Porvair benefits from global regulations and
decarbonisation trends. Its niche technologies serve mission-critical
applications with high barriers to entry.
8. 4imprint - 4imprint is the leading direct marketer of promotional
products in the USA, Canada, the UK and Ireland offering more than 43,000
products. They hold a 2% market share in a highly fragmented market indicating
substantial room for growth to compete successfully with Amazon.
9. Bytes Technology - One of the UK's largest software resellers,
Bytes provides IT solutions including software licensing, security, cloud
services and digital transformation across public and private sectors. They
have strong vendor relationships including with Microsoft (about half of
sales) winning awards such as "Microsoft Partner of the Year". High cash
generation and increasing cloud adoption support continued growth.
10. JTC - A global fund and corporate services provider with a strong
M&A track record. Its client-first culture and scalable platform deliver
high recurring revenues and consistent margin expansion.
Twenty Largest Holdings
as at 31 March 2025
% of portfolio % of portfolio
Value Market cap 31 March 31 March 2024
£'000
Holding Sector £m 2025
discoverIE Electronic and Electrical Equipment 8,160 518 5.2 4.6
XPS Pensions Investment Banking and Brokerage Services 7,500 778 4.8 3.9
Big Yellow Real Estate Investment Trusts 7,456 1,827 4.7 5.2
Hilton Foods Food Producers 7,004 738 4.4 3.1
Telecom Plus Electricity 6,090 1,375 3.9 -
Baltic Classifieds Software and Computer Services 6,010 1,466 3.8 -
Porvair Integrated Engineering 5,780 315 3.7 3.8
4imprint Media 5,550 1,042 3.5 5.4
Bytes Technology Software and Computer Services 5,456 1,165 3.5 3.1
JTC Industrial Support Services 5,448 1,507 3.5 -
MP Evans Food Producers 5,050 538 3.2 2.0
Cranswick Food Producers 4,905 2,644 3.1 4.0
Bloomsbury Media 4,410 480 2.8 -
Gamma Communications Telecommunications Service Providers 4,242 1,161 2.7 -
Games Workshop Leisure Goods 4,197 4,610 2.7 4.9
Integrafin Software and Computer Services 3,825 1,014 2.4 -
Cerillion Investment Banking and Brokerage Services 3,813 450 2.4 1.9
Watches of Switzerland Personal Goods 3,721 990 2.4 1.3
NCC Group Software and Computer Services 3,684 436 2.3 2.1
Marshalls Construction and Materials 3,675 620 2.3 4.7
Twenty Largest Holdings 105,976 67.3
All investments are in ordinary shares.
As at 31 March 2025, the Company did not hold any equity interests in excess
of 3% of any investee company's share capital.
FURTHER INFORMATION
Montanaro UK Smaller Companies Investment Trust PLC's annual report and
accounts for the year ended 31 March 2025 (which includes the notice of
meeting for the Company's AGM) will be available today on
https://montanaro.co.uk/trust/montanaro-uk-smaller-companies-investment-trust/
(https://montanaro.co.uk/trust/montanaro-uk-smaller-companies-investment-trust/)
It has also been submitted in full unedited text to the Financial Conduct
Authority's National Storage Mechanism and is available for inspection at
data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) in accordance with
DTR 6.3.5(1A) of the Financial Conduct Authority's Disclosure Guidance and
Transparency Rules.
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