European Smaller Companies Trust plc
Annual Report and Accounts 2025
For your Trust,
we handpick the very best
of Europe’s Smaller Companies
Contents
Reasons to Invest 1
Highlights 2
Strategic Report
Chairman’s Statement 3
Manager’s Report 7
ESG Report 10
Top 10 H
oldings 12
Twenty Largest Holdings 14
Portfolio Analysis 15
Historic Record 16
Business Model and Strategy 17
Principal and Emerging Risks 19
Directors’ Duties 23
Governance
Board of Directors 27
Directors’ Report 29
Corporate Governance Statement 33
Report of the Audit Committee 36
Directors’ Remuneration Report 39
Statement of Directors’ Responsibilities 42
Financial Report
Independent Auditors’ Report 43
Statement of Comprehensive
Income 50
Balance Sheet 51
Statement of Changes in Equity 52
Statement of Cash Flows 53
Notes to the Financial Statements 54
Other Information
AIFMD Disclosures 67
Alternative Performance Measures 68
Glossary of Terms 70
Shareholder Information 72
Notice of Annual General Meeting 74
Advisers 82
This document is important andrefersto certain matters on whichvoting action
is required. Shareholders who are in any doubt as to what action to take should
consult an appropriate independent adviser immediately.
If any shareholder has sold or transferred all their shares in the Company, they
should pass this document to the purchaser or transferee or to the person
through whom the transfer or sale was effected for onward transmission to the
transferee or purchaser.
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 1
Strong track record
Montanaro has managed your Trust since
September 2006, outperforming by
166.8% since launch
Attractive asset class
Higher returns historically +4.0% p.a.
(Dec 2000 – Mar 2025) for Europe
ex-UK Small versus Large Cap
SmallCap specialists
One of the largest, most experienced
specialist teams in Europe
Quality growth portfolio
49% of our companies have net cash; no
loss makers; strong EPS growth
Good timing
European SmallCap has rarely been so
cheap;the Trust’s P/E ratio has nearly
halved from its peak in August 2021
Active discount control
Regular tender offers, buybacks and lower
fees enhance liquidity and are designed to
reduce the volatility of the discount
Consistently uncovering hidden gems
25 holdings currently in the portfolio have achieved multi-bagger* status
Reasons to Invest
* A multi-bagger is an investment that has increased in value by multiple times its original purchase price.
Total return figures are based on initial purchase price. Data as at 31 March 2025. Figures relate to current holdings only and exclude any past holdings
that may have achieved multi-bagger status.
Top multi-bagger with a
total return of 2128%
Total return
of 1647%
Total return
of 1476%
1 company has soared over 20x
2 companies have grown over 15x
8 companies have delivered returns of over 5x
page 2 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
Highlights
for the year ended 31 March 2025
Investment Objective
The investment objective of Montanaro European Smaller Companies Trust plc (the
“Company” or “Trust”) is to achieve capital growth by investing principally in Continental
European quoted smaller companies.
The Company’s benchmark index is the MSCI Europe ex-UK SmallCap Index (in Sterling terms).
The Company was launched in May 1981. Its current objective and investment policy were
adopted in September 2006. Its Ordinary shares are listed on the Main Market of the
London Stock Exchange.
Performance
Total return % 1 year 3 year 5 year 10 year MAM*
Net Asset Value (“NAV”) per share
(1)
(1.1%) (3.9%) 74.7% 208.3% 473.0%
Share Price
(1)
5.1% (9.6%) 74.6% 215.5% 475.3%
Benchmark**
(2)
1.3% 3.8% 70.2% 120.7% 306.2%
Capital return % 1 year 3 year 5 year 10 year MAM*
NAV per share
(1)
(1.9%) (5.5%) 69.3% 183.5% 373.9%
Share Price
(1)
4.2% (11.6%) 68.8% 188.3% 365.2%
Benchmark**
(2)
(1.1%) (3.3%) 53.8% 82.0% 184.4%
Sources: Morningstar Direct, Association of Investment Companies (“AIC”), Montanaro Asset Management (“MAM”).
As at 31 March 2025 2024 % change
Ordinary share price 148.5p 142.5p 4.2
NAV per Ordinary share 162.0p 165.1p (1.9)
Discount to NAV
(1)
(8.3%) (13.7%)
Net assets** (£’000s) 291,508 312,720 (6.8)
Market capitalisation** (£’000s) 267,188 269,934 (1.0)
Net gearing employed
(1)
2.1% 2.9%
For the year ended 31 March 2025 2024 % change
Revenue return per Ordinary share 1.50p 1.42p 5.6
Dividend per Ordinary share
(1)
1.26p 1.125p 12.0
Ongoing charges
(1)
1.0% 1.0%
Portfolio turnover
(1)
14% 16%
* From 5September 2006, when MAM was appointed as Investment Manager.
** Details provided in the Glossary on pages 70 and 71.
(1)
Refer to Alternative Performance Measures on page 68.
(2)
From 5September 2006, the benchmark was the MSCI Europe SmallCap Index. The benchmark was changed on 1June 2009 to the MSCI Europe ex-UK
SmallCap Index (in Sterling terms).
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 3
Chairman’s Statement
For the year ended 31 March 2025
Results
The year saw a continuation of the trend seen since the end of 2021, namely a significant style headwind partially offset by the
positive influence of stock selection. Montanaro Asset Management (“Montanaro”, “MAM” or the “Manager”) seeks to invest
exclusively in high quality growing companies based on the belief that over the long term, a company’s ability to compound
earnings and cash flows is the primary driver of investment returns. However, in the short term, factors such as investor flows,
political developments and macroeconomic fluctuations can temporarily overshadow underlying fundamentals.
The Net Asset Value (“NAV”) declined by 1.9% to 162.0p per share during the financial year ended 31 March 2025. In comparison,
the benchmark (the MSCI Europe ex-UK Small Cap Index) rose by 1.3% (in Sterling terms). The share price (with dividends
reinvested) gained 5.1% as the discount to NAV tightened from -13.7% to -8.3%.
Whilst shorter term performance has been somewhat disappointing, Montanaro have a long-term investment approach. Over 5 and
10 years, your Company has delivered NAV total returns of 74.7% and 208.3%, outperforming the benchmark by 4.5% and 87.6%
respectively. Since Montanaro were appointed in September 2006, the NAV total return has been 473.0%, 166.8% ahead of the
benchmark (equivalent to an average annual outperformance of 2.0%).
Earnings and Dividends
Revenue earnings per share rose to 1.50p in the year
(2024: 1.42p).
A first interim dividend of 0.3p per share was paid on
22January 2025. A second interim dividend of 0.96p will be
paid on 7 August 2025 to shareholders on the register on
27June 2025. This will bring total dividends for the year to
1.26p per share, an increase of 12.0%.
The Company holds substantial reserves available for
distribution, which gives the Board the ability to smooth any
short-term income volatility.
Strategic Initiatives
On 27 March 2025, the Board announced three strategic
initiatives designed to strengthen the investment proposition
and deliver value for all shareholders:
1. Regular tender offers targeted at improving liquidity;
2. An active share buyback policy aimed at reducing the
volatility of the discount; and
3. A reduction in the management fee.
Further details of each of the initiatives are set out in the
Business Model and Strategy Section of the Annual Report.
Introduction of Regular Tenders
Conscious of shareholders’ desire to improve liquidity, the
Board has proposed a new initiative to offer shareholders the
opportunity to tender shares to the Company twice a year,
around the Interim and Final Results announcements. Shares
will be bought back at a 5% discount to NAV, reflecting the
higher transaction costs associated with smaller companies.
Each tender will be capped at 5% of shares in issue to
protect existing shareholders and manage portfolio liquidity.
Shareholder approval for the first tender offer was granted
on 15 May 2025 and the first tender offer is expected to take
place in Autumn 2025.
Share Buybacks and Treasury Shares
During the year, the Company bought back 9,502,921
Ordinary shares. As a result, the Company held 9,502,921
Ordinary shares in Treasury as at 31 March 2025.
Buying back Ordinary shares at a discount is accretive to the
NAV per share. As such, the buybacks conducted during the
year contributed an uplift of 0.45% to the NAV per share.
Since the end of the year, the Company continued to buy
back Ordinary shares and substantially utilised the authority
granted at the 2024 AGM. Accordingly, the Board secured
additional authority at the General Meeting convened in May
2025 to cover the period until the next AGM.
Our stated policies on share buybacks and share issuances
are set out on pages 18 and 32. The Board is seeking to
renew the Company’s share buyback and issuance authorities
at the forthcoming AGM.
“ Investor sentiment has shifted towards European
equities this year as they have seen improved
performance. They remain under‑owned
and still appear attractively valued.”
page 4 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
Management Fee
The Manager has agreed to a reduction in management fees
from 0.90% per annum to 0.825% per annum of the market
capitalisation of the Company up to £500 million and from
0.75% to 0.70% per annum between £500 million and £750
million. Above £750 million, the fee remains unchanged at
0.65% per annum.
This reduction in fees took effect on 1 April 2025, and is the
second fee reduction which we have negotiated in the past
four years.
As a demonstration of their confidence in the Trust,
Montanaro has continued toinvest in theCompany and now
hold 8.0% of the Company’s shares.
Environmental, Social and Corporate Governance (“ESG”)
Montanaro believes that strong ESG practices are closely
linked to a company’s ability to create long-term value
for its shareholders. ESG considerations are therefore
embedded within their definition of “Quality” and have been a
fundamental part of their investment process for many years.
The ESG Report can be found on pages 10 and 11 of this
Annual Report. It outlines developments in Montanaro’s
approach to ESG, their ongoing commitment and their
engagement with investee companies.
Borrowings
The Board, in consultation with the Manager regularly reviews
the gearing strategy of the Company and approves any
gearing facility. Gearing amplifies the returns from underlying
profits or losses generated by the investment portfolio.
The Board has set a maximum limit on borrowing (net of cash)
of 30% of shareholders’ funds at the time of borrowing. At the
end of the financial year, the Company had borrowings (net of
cash) of 2.1% compared to 2.9% at the beginning of the year.
Board Succession
As part of our normal succession planning process, I intend
to retire as Chairman and from the Board on 31 December
2025. This will be after we have conducted our first bi-annual
tender. We are very fortunate that Gordon Neilly has agreed
to step into the role of Chairman and with his extensive
experience of the investment trust sector there can be no
better person to lead our Trust in the future.
Communication with Shareholders
Over the past few years, the composition of our shareholder
base has changed significantly with an increasing number of
individual investors coming onto the register via investment
platforms. We are keen to encourage an open dialogue to keep
all shareholders up to date with key developments. Our website
– www.montanaro.co.uk/trust/mesct – is continually updated
with factsheets, reports, presentations, webinar recordings
and commentaries as well as more details about the Manager,
investment philosophy and process. We encourage shareholders
to visit regularly and welcome any feedback and suggestions.
Wewould also encourage shareholders to sign up to receive
regular updates by email.
Dividend Policy
Following discussion on the timing of dividend payments
to shareholders with the Company’s broker Cavendish, the
Board has decided to move to a cycle of paying two interim
dividends per annum in or around January and August.
This represents a change from the previous dividend
payment cycle of paying an interim and final dividend. As the
Company will no longer put a final dividend to shareholders
for approval, in accordance with recommended corporate
governance best practice, the new dividend policy will be put
to shareholders approval at the upcoming Annual General
Meeting. The new dividend policy can be found on page 18 of
this report.
Annual General Meeting
The AGM will be held at the offices of Montanaro Asset
Management, 53 Threadneedle Street, London EC2R8AR,
on 4 September 2025 at 11.00 a.m. Shareholders are
encouraged to attend the Meeting where there will be an
opportunity to meet and ask questions of the Board and
theManager.
Detailed instructions on how to vote on the AGM resolutions are
provided on pages 79 to 81. We encourage all shareholders to
review this guidance and ensure their votes are submitted.
Additionally, the AIC has prepared information on how to vote
across the most common investment platforms, this guidance
is available at – www.theaic.co.uk/how-to-vote-your-shares.
Outlook
As 2024 drew to a close, the prevailing investment consensus
– that US mega-caps were the only place to be – reached a
crescendo following the election of Donald Trump as President.
However, events since then have cast doubt over this view. The
tariffs announced on “Liberation Day” shocked the world. The
United States has made it increasingly clear that they now view
its relationships with the rest of the world – including Europe –
as adversarial or, at best, purely transactional.
Yet with change comes opportunity. Investor sentiment has
shifted towards European equities this year as they have seen
improved performance. They remain under-owned and still
appear attractively valued.
Chairman’s Statement continued
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 5
Since the peak in August 2020, the forward P/E of SmallCaps in Continental Europe has fallen from over 23x to around 13x at the
end of March 2025. This substantial de-rating leaves them trading at a discount to their long-term historical average, as illustrated
in the chart below:
MSCI Europe ex-UK SmallCap – 12 month forward P/E
6
8
10
12
14
16
18
20
22
24
03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
12.8x
Nov 2008: 8.2x
Sep 2011: 10.7x
Source: Montanaro Asset Management, MSCI, FactSet. Note: Thick red line = average +2 standard deviations (dashed red line = average + 1 standard deviation).
Thickgreen line = average -2 standard deviations (dashed green line = average -1 standard deviation). Black line = average.
Moreover, European SmallCaps are valued at a discount to the wider market, which is unusual. Indeed, the discount is at a level
last seen in the depths of the Global Financial Crisis of 2008:
Europe ex-UK Small v. Market – 12 month forward P/E
(MSCI Europe ex-UK SmallCap v. MSCI Europe ex-UK Index, GBP)
Nov 2008: -4%
24
-1
5%
-1
0%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
55%
60%
03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23
12%
Jan 2015: 0%
Source: Montanaro Asset Management, MSCI, FactSet. Note: Thick red line = average +2 standard deviations (dashed red line = average + 1 standard deviation).
Thick green line = average -2 standard deviations (dashed green line = average -1 standard deviation). Black line = average.
page 6 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
We must, however, acknowledge that increasing global trade
barriers and indeed policy uncertainty are likely to hinder
rather than support economic growth. In this environment,
owning a portfolio of very high quality, structurally growing
companies provides us with a strong degree of comfort. One of
the defining features of such quality companies is their ability
to invest for the future and capture market share in more
challenging economic environments, while weaker competitors
have to focus on day-to-day survival.
In summary: European smaller companies have a long track
record of delivering strong returns to investors. Today, they
are trading at a significant discount to both their own history
and to their larger counterparts. The previous overwhelming
investment consensus favouring the US over Europe has
been challenged and investor sentiment has shifted towards
European equities. Meanwhile, the companies in your portfolio
are well positioned to invest and grow even through difficult
times, supported by strong balance sheets, high returns on
capital, and clear structural growth opportunities. The portfolio
continues to be managed by an exceptionally well-resourced
and experienced team at Montanaro. In addition, the Board
has implemented a series of measures aimed at improving
liquidity, reducing discount volatility and further reducing costs.
Against this backdrop, we continue to look forward to the
future with confidence.
R M CURLING
Chairman
18 June 2025
Chairman’s Statement continued
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 7
The Attractions of Quoted European Smaller Companies (‘SmallCap’)
The key attraction of investing in 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 on 1 January 1955 would now be worth £1,503 whereas the same £1 invested in smaller
companies would now be worth £10,040 – almost seven times more.
Continental European Small v. LargeCap
(MSCI Europe ex UK SmallCap v. LargeCap indices, Net Total Return)
(rebased to 100 from 31December 2000)
31 Dec
2000
MSCI Europe (ex UK) SmallCap (in GBP terms)MSCI Europe (ex UK) LargeCap (in GBP terms)
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 18 21 22
17 2019
23 24
0
100
200
300
400
500
600
700
800
900
There is less comprehensive data on Europe – it only goes
back to 2000. However, it suggests that the SmallCap Effect is
even more pronounced on the Continent: as the chart above
illustrates, European ‘small’ companies have outperformed
‘large’ companies by 4% per annum.
Remarkably, European SmallCaps have returned 9.2% p.a.
(in Sterling terms) since the turn of the century, thereby
outperforming the vast majority of SmallCap markets around
the world including the UK, Japan, Australia the BRICs and
even the USA (based on the Russell 2000 Index).
The market for European smaller companies is inefficient.
While some large companies are analysed by more than
50brokers, many smaller companies in Europe 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
small companies. Our large team of analysts and portfolio
managers 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. We have been the Manager of your Company
since September 2006.
Manager’s Report
“ European SmallCaps have returned 9.2% p.a. since the turn of the century,
outperforming the vast majority of SmallCap markets around the world.”
“The year to 31 March 2025 was notable for its M&A activity: we are clearly
not the only ones who believe these companies are attractively valued and
have strong growth prospects.”
page 8 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
Investment Philosophy and Approach
We specialise in researching and investing in quoted smaller
companies. We have a disciplined, two-stage investment
process.
In the first stage, we identify “good businesses” within our
investable universe. We look for high quality companies in
markets that are growing. 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 prefer companies that can deliver
self-funded organic growth and remain focused on their core
areas of expertise, rather than businesses that spend a lot of
time on acquisitions.
Conversely, we avoid those with stretched balance sheets;
poor free cash flow generation; incomprehensible or heavily
adjusted accounts; unproven or unreliable management; or
that face structurally challenged business models with stiff
competition.
A company must also pass our stringent quality and ESG
checklists. ESG has been integrated into our disciplined
investment process for almost two decades.
When we have identified a company that we believe is
high quality, has structural growth and is well managed
from a business and ESG perspective, it is reviewed by our
Investment Committee before it can proceed to the next
stage. Companies that do not possess these attributes are
rejected.
Companies that pass the first stage then undergo a valuation
& risk assessment. We determine their intrinsic value, typically
through a proprietary discounted cashflow analysis, to ensure
they will make a “good investment” (“good businesses” and
“good investments” are not always the same). The Investment
Committee scrutinises the forecasts and assumptions made
for each business. While the biggest risk – that we invest in
poor or declining businesses – is addressed in the first stage,
in stage two we take a more quantitative approach, with
in-depth analysis of liquidity, factor risk and correlations and
how these might affect position sizing and the subsequent
portfolio characteristics. Only once this is complete will we
add it to our Approved List.
Companies that are on the Approved List and which we also
believe are attractively valued are then eligible for inclusion in
your portfolio.
Our Investment Team use their industry knowledge and a
range of proprietary screens to continually search for new
ideas. With thousands of quoted companies from which to
choose, we are spoiled for choice.
We believe that a deep understanding of a company’s
business model and the way it is managed are essential. We
visit our investee companies on a regular basis. We examine
management’s past track record in detail as we seek to
understand their goals and aspirations. In smaller companies,
the decisions and motivation of the entrepreneurial
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 examine
remuneration and corporate governance policies carefully.
Once a company has been added to the portfolio, our
investment team conducts ongoing analysis. 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 management. We will get things
wrong and make mistakes, but we try to learn from them.
In summary, we invest in well managed, 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. Finally, we align our interests with our
investors by investing meaningful amounts of our own money
alongside yours. We are significant shareholders in the Trust.
The Portfolio
At 31 March 2025, the portfolio consisted of 49 companies
of which the top ten holdings represented 38.3% of net
assets. Sector and country distributions within the portfolio
are driven by stock selection. Although weightings relative
to the market are monitored, overweight and underweight
positions are based on where the greatest value and upside
are perceived to be.
Performance Attribution
The largest positive contributors over the period were:
Plejd is a Swedish developer of smart lighting, heating and
other electrical products, which are sold to professional
electricians. The company had an excellent year, with
operating profit more than doubling thanks to both significant
revenue growth and a well invested cost base that allowed for
significant operating leverage.
VZ Holding is a Swiss independent financial consultant and
wealth manager. The company was a top three contributor
last year too – another demonstration that “running your
winners” is often a fruitful strategy. The company had a good
year thanks to continued demand for financial advice and
an independent approach which continues to appeal to
customers.
Manager’s Report continued
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 9
MTU Aero Engines manufacture and maintain aircraft
engines and components. The company successfully
improved efficiency in the Geared Turbofan fleet
management plan, while continuing to deliver growth
elsewhere in the business.
Inevitably the year was not without some stock price declines
as well. The largest detractors were:
Tecan develop automated instruments and solutions that are
used in laboratories. The company endured a difficult year
as biopharma companies pulled back spending and research
budgets in the US in particular came under threat from the
new administration.
Bachem is a leading manufacturer of peptides. The share
price declined as the timing for the new manufacturing facility
(and, therefore, the associated revenues) was pushed out.
IMCD is one of the world’s largest specialty chemical
distributors. Hopes of a volume recovery in 2024 proved to
be premature, with investors de-rating the stock through
the year.
Portfolio Changes
We try to keep portfolio turnover as low as possible. However,
we typically make a few changes each year as we identify
new investment ideas that we expect will provide stronger
long-term returns than existing holdings. Companies that
become too large, are acquired or where the investment
case deteriorates are also replaced with new ideas from our
Approved List.
The year to 31 March 2025 was notable for its M&A activity:
we are clearly not the only ones who believe these companies
are attractively valued and have strong growth prospects.
Esker and Epsilon Net, both niche software providers,
were bought out. The merger of Chr. Hansen, the probiotic
developer, and Novozymes was completed and we
subsequently sold our holding in the combined company on
size grounds. Esker and Chr. Hansen both exited the portfolio
having risen by multiple times their initial purchase price.
Epsilon Net was sold at a premium to our purchase price
and made a respectable return for the portfolio, but did not
achieve the same feat due to being taken over less than a
year after we bought the stock.
Dynavox, the supplier of augmentative and alternative
communication devices used by people with disabilities to
communicate more effectively, and cBrain, which develops
modular software primarily for government and state
departments, were added to the portfolio.
Continual Improvement
Each year we take time to look back at our successes and
mistakes to assess how our systems and processes can be
improved.
We have made significant strides in our ability to dynamically
quantify and monitor our risk profile, especially with
respect to factor risks. Our objective – as with all our risk
management processes – is not to eliminate risk entirely;
rather, it is to take risk selectively and thoughtfully where we
believe it is well rewarded. Our focus is on ensuring that we
are exposed to the right risks while actively minimising our
exposure to those factor risks on which we have either a
negative view or no conviction at all.
We have been systematically collecting data on the
companies we research – from new idea fruition to exit
– for many years. We have now reached a point where
the dataset is sufficient to extract meaningful patterns
and insights. Our analysis has already revealed several
interesting findings, leading to refinements in both our idea
generation process and the way we conduct Investment
Committee meetings.
How to Invest
We have invested a great deal of time and effort to make the
Company 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
the Trust’s retail following. With the Board, we have appointed
Marten & Co to provide sponsored research – you can find
the initiation report, here: https://www.montanaro.co.uk/
mesct-quality-business/ and update reports on our website:
www.montanaro.co.uk/trust/mesct.
MONTANARO ASSET MANAGEMENT
Lead Porfolio Manager; George Cooke
18 June 2025
page 10 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
Montanaro has long placed sustainability at the heart of
its business. We became a certified B Corporation in 2019,
meeting some of the highest global standards for social and
environmental performance. We successfully recertified in
2022 with a score of 105.5 — a significant improvement on our
original 2019 score and well above the minimum threshold.
In 2022, we also set an ambitious target to become carbon
negative by 2030, including the removal of our historical
emissions.
Ethical Restrictions and ESG Analysis
Montanaro has a long-standing commitment to sustainable
investing, which is reflected in the way the portfolio is
managed. We apply a range of ethical exclusions and do not
invest in companies that derive a significant proportion of their
revenues from harmful products or practices.
Environmental, Social and Governance (“ESG”) factors form an
integral part of how we define “Quality”. Our proprietary ESG
Checklist is used across our investment process to identify
risks and opportunities. Analysts assess each company’s
performance on issues such as climate change, supply chains,
governance, board structure and employee wellbeing.
Engagement and Active Ownership
Where we identify ESG risks or areas for improvement, we
engage constructively with management. As investors in
smaller companies, we are often able to speak directly with
senior leadership, including CEOs.
During the year, we engaged with MTU Aero Engines to
strengthen its approach to climate-related disclosure. The
company’s 2025 Sustainability Report marked a significant
improvement in transparency, with more detailed Scope
3 emissions data in line with the Corporate Sustainability
Reporting Directive (CSRD). We also welcomed the company’s
ongoing review of a formal commitment to the Science Based
Targets initiative (SBTi), and we continue to support efforts to
align with best-practice decarbonisation pathways.
We also engaged with CTS Eventim, encouraging stronger
internal governance and oversight of ESG issues. Following
our discussions, the company established an internal ESG
competence centre and published its first Non-Financial
Report. We were pleased to see growing board-level
awareness and a commitment to improving Scope 3 disclosure
across decentralised operations. These are important first
steps and we will maintain an active dialogue as their ESG
framework develops.
Elsewhere, we contributed to the CDP Non-Disclosure
Campaign, calling on companies to improve their
environmental reporting, and we continued to support
portfolio companies working to meet new CSRD double
materiality requirements. In several cases, including with
Brembo, we completed surveys to help management prioritise
sustainability topics based on stakeholder input.
Deep Dive Research and Industry Engagement
Our Investment Team conducts regular Deep Dive projects,
combining internal research with external stakeholder
engagement. In January 2025, we published our fifth Net
Zero Carbon Deep Dive report, examining the progress
our investee companies are making on the pathway to net
zero. We also continued to work on sustainability challenges
identified in our recent Built Environment report. These
research initiatives deepen our understanding of emerging
ESG themes, risks and opportunities and help inform
investment decisions across the firm.
Montanaro remained active within the sustainable investment
community. We maintained our role as a signatory to the
UK Stewardship Code, with our latest report receiving
endorsement from the Financial Reporting Council. We
continued to support initiatives including the Taskforce on
Nature-related Financial Disclosures (TNFD), the ShareAction
Workforce Disclosure Initiative, and investor coalitions on food
policy, public health and human rights.
ESG Report
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 11
We are signatories to and engage with important initiatives:
Signatory
date Initiative
2009
UN Principles for Responsible
Investment (“PRI”)
2010
UK Stewardship Code
2015
Carbon Disclosure Project
(“CDP”)
2017 LGPS Code of Transparency
2019
B Corporation
2019
Farm Animal Investment Risk
and Return (“FAIRR”)
2020
Net Zero Asset Managers
Initiative (NZAM)
2022
Tobacco Free Portfolios
Finance Pledge
2022 Living Wage Accreditation
2023
UK Sustainable Investment and
Finance Association (“UKSIF”)
2023
GFANZ (Glasgow Financial
Alliance for Net Zero)
2023
ShareAction
2023
Business Coalition for a Global
Plastics Tready
2023
Task Force on Nature-related
Financial Disclosures (“TNFD”)
Montanaro’s Head of Sustainable Investments continues to
serve on the Board of the UK Sustainable Investment and
Finance Association (UKSIF), a leading network of over 300
financial services firms representing more than £19 trillion in
assets. Through this role, we actively contribute to shaping the
future of sustainable finance in the UK. Over the past year, this
has included direct input on key policy developments such
as the implementation of the FCA’s Sustainability Disclosure
Requirements (SDR), which came into force in 2024 and are
now beginning to reshape the UK regulatory landscape.
We also remain active participants in the Glasgow Financial
Alliance for Net Zero (GFANZ), working alongside peers to
accelerate the transition to a low-carbon economy through
credible, science-aligned action. Our ongoing involvement in
these initiatives ensures we stay at the forefront of industry
developments while helping to raise standards across the
investment sector.
In recognition of our broader commitment to sustainability,
Montanaro was named “ESG Champion of the Year” at the
Financial Times/Investors’ Chronicle Investment Awards in 2024.
MONTANARO ASSET MANAGEMENT
18 June 2025
page 12 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
Top 10 Holdings
as at 31 March 2025
1. VZ Holding
A Swiss financial consultancy and wealth manager with a tech-enabled
platform. Its focus on fee-based advice and recurring revenues makes it a
standout in a traditionally commission-driven industry.
2. Kitron
An electronics manufacturing services (EMS) provider for defence,
healthcare, and electrification markets. Kitron offers resilient growth through
long-term contracts, reshoring trends, and rising demand for high-reliability
electronics.
3. ATOSS Software
A leader in workforce management software. Its scalable cloud solutions
help companies optimise labour costs, with a high-margin SaaS model
driving recurring revenue and impressive long-term growth.
4. MTU Aero Engines
A key player in aircraft engine manufacturing and maintenance. Benefiting
from global air travel recovery and a strong order book, MTU offers a
powerful combination of engineering excellence and after-market revenue.
5. CTS Eventim
Europe’s leading ticketing and live events platform. Its dominant digital
position, asset-light model and the return of large scale events has delivered
strong earnings growth.
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 13
6. Reply
An IT consultancy focused on AI, cloud and digital innovation. Reply’s
decentralised model and blue-chip client base drive consistent growth and
strong returns in the fast-evolving tech landscape.
7. Fortnox
Cloud-based accounting and admin software for SMEs. With a near-
monopoly in Sweden, high switching costs and expanding product suite,
Fortnox is a classic high-margin compounder. The company received a
takeover offer on 31 March 2025.
8. NCAB
A global printed circuit board supplier offering premium service and logistics.
With an asset-light model and consolidation strategy, NCAB delivers reliable
cashflows and market share growth.
9. Plejd
Develops smart lighting control systems for homes and businesses. Its
intuitive products and strong network of electricians make it a high-growth
disruptor in Nordic smart homes.
10. Brunello Cucinelli
The Italian luxury brand known for “humanistic capitalism” and timeless
craftsmanship. Its focus on sustainable growth, exclusivity and global
demand for quiet luxury support premium positioning and pricing power.
page 14 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
Holding Country
31 March
2025
Value
£’000
31 March
2024
Value
£’000
31 March
2025
% of
net assets
31 March
2024
% of
net assets
31 March
2025
Market cap
£m
VZ Holding Switzerland 13,270 9,663 4.6 3.1 5,903
Kitron Norway 13,179 9,964 4.5 3.2 654
ATOSS Software Germany 12,602 14,058 4.3 4.5 1,657
MTU Aero Engines Germany 12,063 14,121 4.1 4.5 14,484
CTS Eventim Germany 11,588 13,075 4.0 4.2 7,455
Reply Italy 10,103 8,976 3.5 2.9 4,724
Fortnox Sweden 10,048 12,493 3.4 4.0 4,090
NCAB Sweden 9,884 14,350 3.4 4.6 740
Plejd Sweden 9,563 3,813 3.3 1.2 402
Brunello Cucinelli Italy 9,286 9,518 3.2 3.0 6,012
Belimo Holding Switzerland 8,763 7,186 3.0 2.3 5,825
IMCD Netherlands 8,727 11,870 3.0 3.8 6,070
AAK Sweden 7,566 6,597 2.6 2.1 5,602
Invisio Sweden 7,397 3,980 2.5 1.3 1,349
Rational Germany 7,029 7,558 2.4 2.4 7,297
Viscofan Spain
6,679 6,296 2.3 2.0 2,488
Thule Sweden 6,634 7,177 2.3 2.2 2,394
Sectra Sweden 6,456 5,396 2.2 1.7 3,600
Biogaia Sweden 5,934 3,484 2.0 1.1 859
Merlin Properties Spain 5,774 5,959 2.0 1.9 4,652
Twenty Largest Holdings 182,545 62.6 56.0
Twenty Largest Holdings
as at 31 March 2025
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 15
Geographical Analysis (31March)
1
2
3
4
5
7
6
8
9
10
11
Source: Montanaro Asset Management
Sector Distribution (31March)
2025 2024
Information
Technology 28.6% 30.7%
Industrials 26.2% 23.9%
Health Care 15.2% 17.3%
Financials 8.3% 6.6%
Consumer
Discretionary 8.2% 8.7%
Consumer
Staples 4.7% 4.0%
Communication
Services 3.9% 4.1%
Real Estate 3.5% 2.8%
Materials 1.4% 1.9%
Source: Montanaro Asset Management
Market Capitalisation of Holdings by Value (31March)
£0–£500m£0–£500m
£1bn–£3bn£1bn–£3bn
£500m–£1b£500m–£1bn
£3bn–£5bn£3bn–£5bn
>£5bn>£5bn
. %18.9%
.9.5%
2 . %27.8%
. %15.6%
2 . %28.2%
8.2%
18.2%
24.6%
24.7%
24.3%
2022025 2022024
Source: Montanaro Asset Management
Portfolio Analysis
2025 2024
1
Sweden 30.3% 24.4%
2
Germany 19.1% 21.1%
3
Italy 14.3% 15.4%
4
Switzerland 12.4% 12.5%
5
Norway 8.6% 6.3%
6
Spain 4.1% 3.8%
7
Netherlands 3.9% 3.7%
8
Denmark 2.8% 1.9%
9
France 2.6% 7.4%
10
Belgium 1.9% 2.6%
11
Greece 0.0% 0.9%
page 16 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
Net assets
£’000s
NAV
per share
Ordinary
share price
(Discount)/
premium^
Dividends
per share
Ongoing
charges^
5September 2006* 60,022 344.0p 322.0p (6.4%) n/a 1.6%
31March 2007 74,447 426.7p 404.0p (5.3%) 4.00p 1.8%
31March 2008 69,061 401.6p 340.0p (15.3%) 4.00p 1.8%
31March 2009 42,653 257.4p 220.8p (14.2%) 7.33p** 1.6%
31March 2010 71,059 428.8p 373.0p (13.0%) 4.50p 1.7%
31March 2011 88,837 536.0p 467.0p (12.9%) 4.50p 1.6%
31March 2012 81,278 471.6p 405.0p (14.1%) 5.50p 1.5%
31March 2013 93,009 559.2p 519.3p (7.1%) 6.75p 1.5%
31March 2014 98,683 593.3p 540.0p (9.0%) 7.00p 1.5%
31March 2015 95,751 572.2p 515.0p (10.0%) 7.50p 1.5%
31March 2016 106,418 636.0p 540.0p (15.1%) 7.50p 1.4%
31March 2017 136,050 813.1p 695.0p (14.5%) 8.25p 1.2%
31March 2018 150,776 901.1p 800.0p (11.2%) 8.50p 1.2%
31March 2019 169,141 1010.8p 890.0p (12.0%) 9.00p 1.2%
31March 2020 160,123 956.9p 880.0p (8.0%) 9.25p 1.2%
31March 2021 276,065 1,589.0p 1,610.0p 1.3% 9.25p 1.2%
10 for 1 share split effective from 14September 2021
31March 2022 324,905 171.5p 168.0p (2.0%) 0.925p 1.1%
31March 2023 299,975
158.4p 137.6p (13.1%) 0.970p 1.0%
31 March 2024 312,720 165.1p 142.5p (13.7%) 1.125p 1.0%
31 March 2025 291,508 162.0p 148.5p (8.3%) 1.260p 1.0%
* Date of commencement of current management arrangements.
** Includes special dividends of 2.83p per share.
^ Alternative Performance Measures, refer to page 68.
Performance since commencement of current management arrangements
(rebased to 100 from 1 September 2006)
100
200
300
400
500
600
700
800
900
0
Net Asset Value Total Return
Benchmark Total Return
Share Price Total Return
1 Sept
2006
07 08 09 11 12 13 14 15 16 17 18 19 20 21 22 23 2410 25
Source: Montanaro Asset Management
Historic Record
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 17
The purpose of this report is to provide shareholders with
details of the Company’s strategy, objectives and business
model. It should be read in conjunction with the Chairman’s
Statement on pages 3 to 6 and the Manager’s Report on
pages7 to 9, which provide a review of the Company’s
investment activity and a look to the future.
The Board is responsible for the stewardship of the Company,
including overall strategy, investment policy, borrowings, dividends,
corporate governance procedures and risk management.
Biographies of the Directors can be found on pages 27 and 28.
PRINCIPAL ACTIVITY
The Company carries on business as an investment trust and
its principal activity is portfolio management. Its Ordinary
shares are traded on the Main Market of the London
StockExchange.
The Company has no employees but contracts investment
management and administration to appropriate external
service providers, who are subject to oversight by the Board of
Directors. The principal service providers during the year were:
•
Montanaro Asset Management (“Montanaro”, “MAM” or the
“Manager”), which was appointed as Investment Manager
on 5 September 2006 and the Company’s Alternative
Investment Fund Manager (“AIFM”) on 22 July 2014.
•
Juniper Partners Limited, which provided company
secretarial and fund administration services from
1July2023.
•
Equiniti Limited which provided registrar services during
the year.
•
Bank of New York Mellon (International) Limited which
provided depositary services during the year.
STATUS OF THE COMPANY
The Company was incorporated in Scotland in 1981 under
registered number SC074677, and is domiciled in the United
Kingdom and registered as an investment company as defined
in Section 833 of the Companies Act 2006.
The Company has been approved by HMRC as an investment
trust under Sections 1158 and 1159 of the Corporation Tax Act
2010, subject to continuing to meet eligibility requirements.
The Directors are of the opinion that the Company has
conducted its affairs in a manner compliant with the conditions
for continued approval and intends to continue to do so. As
an investment company that is managed and marketed in the
United Kingdom, the Company is an Alternative Investment
Fund (“AIF”) falling within the scope of, and subject to, the
requirements of the Alternative Investment Fund Managers
Directive (“AIFMD”). Further details are provided in the AIFMD
Disclosures on page 67.
INVESTMENT OBJECTIVE
The Company’s objective is to achieve capital growth by
investing principally in Continental European quoted smaller
companies. The Company’s benchmark index is the MSCI
Europe ex-UK SmallCap Index (in Sterling terms).
INVESTMENT POLICY
The Company invests principally in quoted smaller companies
withinthe European Union, Norway and Switzerland (but is not
restricted from investing in smaller companies quoted on other
European stock exchanges). In addition, the Company may invest in:
•
Companies listed on non-European stock exchanges that
derive significant revenues or profits from Europe;
•
European securities, such as global depositary receipts,
listed on other international stock exchanges; and
•
Debt issued by European governments or denominated in
European currencies.
The Company’s investment policy is flexible, enabling it to
invest in all types of securities of companies, including (but
not limited to) equities, preference shares, debt, convertible
securities, warrants and other equity-related securities. The
Company may also invest, where appropriate, in open-ended
collective investment schemes and closed-ended funds that
invest in Europe. It is not intended that the Company will
acquire securities that are unquoted or unlisted at the time of
investment (with the exception of securities which are about to
be listed or traded on a stock exchange). However, the Company
may continue to hold securities that cease to be quoted or listed
if the Manager considers this to be appropriate.
Investment risk is diffused through holding a range of securities
in different countries and industry sectors. Investments are
not limited as to country or sector basis weightings, but no
investment in the portfolio may exceed 10% of the Company’s
total assets at the time of investment. The Company may invest
in derivatives, financial instruments, money market instruments
and currencies solely for the purpose of efficient portfolio
management (i.e. solely for the purpose of reducing, transferring
or eliminating investment risk in the Company’s investments,
including any technique or instrument used to provide
protection against currency and credit risks).
The Company borrows funds for investment to enhance
returns over the long-term and may borrow in Sterling, Euros
or other currencies. The Board has set a maximum limit on
borrowing, net of cash, of 30% of shareholders’ funds at the
time of borrowing.
The Company’s portfolio will normally be fully invested. However,
during periods in which changes in economic conditions or other
factors so warrant, the Company may reduce its exposure to
securities and increase its position in cash and money market
instruments. 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 Financial Conduct Authority.
DIVIDEND POLICY
As previously mentioned in the Chairman’s Statement on page3,
the Board has decided to move to a cycle of paying two interim
dividends per annum in or around January and August.
Business Model and Strategy
page 18 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
Thepurpose of the change being to align dividend payments with
the release of the Annual and Interim Reports. This represents a
change from the previous dividend payment cycle of paying an
interim dividend in January and a final dividend in September.
The new dividend policy has therefore been updated to
include the following additional wording “Under normal market
conditions the Company will pay two interim dividends per year,
aligning with the release of the Annual and Interim Reports”.
New Dividend Policy
The Company’s primary aim is to deliver capital growth to its
shareholders, rather than dividend income. In determining
dividend payments, the Board takes account of income
forecasts, brought forward revenue reserves, the Company’s
dividend payment record and the Corporation Tax rules
governing investment trust status. These rules determine the
minimum level of dividend which must be paid in order to
comply with Section 1158 of the Corporation Tax Act 2010 in
respect of the retention of distributable income. Dividends
can also be paid from the Realised Capital Reserve from any
surplus arising from the realisation of any investment. Under
normal market conditions the Company will pay two interim
dividends per year, aligning with the release of the Annual and
Interim Reports.
Going forward, given the Board will no longer put a final
dividend to shareholders for approval, the Company’s dividend
policy will be put to shareholders for approval annually at the
Annual General Meeting.
REGULAR TENDER OFFERS
On 15 May 2025, shareholders approved the Board’s proposal
to implement tender offers on a bi-annual basis. These tender
offers will provide shareholders with the opportunity to
tender their shares for repurchase by the Company at a 5%
discount to NAV (reflecting the wider spreads amongst smaller
companies and the cost associated with the exercise) and
bring increased liquidity to the Company’s shares. Each tender
offer will take place around the time of the publication of the
Company’s Interim and Final Results and will be limited in total
to a maximum of 5% of the Company’s shares in issue. If the
situation occurs whereby a tender offer is oversubscribed, any
shares offered for repurchase by shareholders will be dealt
with on a pro-rata basis. The first tender offer is expected to
take place in Autumn 2025 following the Interim Results.
SHARE BUYBACK POLICY
In normal market circumstances, the Board will target a single
digit share price discount to NAV. Subject to market volatility,
the Board anticipates that this will be achieved through a
combination of the bi-annual tender offers and ad hoc share
buybacks. On 15 May 2025, shareholders approved the renewal
of the Company’s authority to buyback its own shares, the Board
will continue to seek shareholder approval as necessary to
extend its authority to buy back shares.
KEY PERFORMANCE INDICATORS
The Board recognises that it is long-term share price returns that
are most important to the Company’s shareholders. They are
largely driven by competitive portfolio returns and by keeping
down the level of both the discount and ongoing charges.
The Board uses a number of key performance indicators to
assess the Company’s success in pursuing its objectives.
They are as follows:
•
Capital and total return – NAV and share price returns,
both absolute and against the benchmark;
•
Discount of share price to NAV per share;
•
Gearing; and
•
Ongoing charges.
The NAV and share price returns against the benchmark index
for the one, three, five and ten year periods ended 31March
2025 and for the period since Montanaro were appointed
as Manager are shown on page 2. The historic discount and
ongoing charges figures are included in the Historic Record
on page 16.
The Company’s performance for the year against the key
performance indicators, together with the outlook for the
coming year, is reported within the Highlights on page 2, the
Chairman’s Statement on pages 3 to 6 and the Manager’s
Report on pages 7 to 9.
THE MANAGER
Established in 1991, Montanaro is a highly experienced
specialist investor in quoted smaller companies. It has one
of the largest teams in the UK researching and investing
exclusively in quoted smaller companies and currently
manages circa £3 billion, mainly on behalf of leading financial
institutions. Montanaro’s investment philosophy and approach
is set out in the Manager’s Report on page 8.
The Manager is a signatory to the Principles for Responsible
Investment, the UK Stewardship Code and the LGPS Code of
Transparency. In June 2019, Montanaro became a B Corporation,
a business certified for meeting the highest verified standards
of social and environmental performance, transparency and
accountability. The Manager is a signatory to a number of
industry commitments as detailed on page 11. Montanaro is
also a B Corporation, a business certified for meeting the highest
verified standards of social and environmental performance,
transparency and accountability. Further information is included
in the ESG Report on pages 10 and 11.
THE BOARD
At the date of signing this report, the Company has four Directors
– two men and two women. The Company hasno employees.
JUNIPER PARTNERS LIMITED
Company Secretary
18 June 2025
Business Model and Strategy continued
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 19
Principal and Emerging Risks
In accordance with the AIC Code of Corporate Governance, the Board has an established process for identifying, evaluating
and managing the emerging and principal risks faced by the Company. The Board carefully considers the Company’s principal
and emerging risks and seeks to mitigate these risks through continued and regular review, policy setting, compliance with and
enforcement of contractual obligations and active communication with the Manager, the Administrator and shareholders.
Most of the principal and emerging risks that could threaten the Company’s objective, strategy, future returns and solvency are
market-related and comparable to those of other investment trusts investing primarily in quoted securities.
The Report of the Audit Committee on pages 36 to 38 summarises the Company’s internal control and risk management
arrangements. By means of the procedures set out in that summary, and in accordance with the Guidance on Risk Management,
Internal Control and Related Financial and Business Reporting, issued by the Financial Reporting Council, the Board has
established an ongoing process for identifying, evaluating and managing the significant risks faced by the Company. It has also
reviewed the effectiveness of the Company’s risk management and internal control systems during the year. During the year, the
Audit Committee carried out a robust assessment of the principal and emerging risks facing the Company, including those that
would threaten its business model, future performance, solvency or liquidity.
The investment trust sector continues to evolve, driven by a shifting shareholder base and the challenges of engaging and
communicating with retail investors. In addition, the Company is facing an emerging risk from heightened geopolitical tensions,
which may influence market stability and investor sentiment. The resulting impact on the Company’s operating and risk
environment are described within the principal risks section below.
Notes 15 to 20 to the financial statements provide detailed explanations of the risks associated with the Company’s financial
instruments and their management.
Principal Risks Mitigation
Corporate strategy:
An inappropriate or unattractive objective and strategy may
have an adverse effect on shareholder returns or cause a
reduction in demand for the Company’s shares, both of which
could lead to a widening discount.
Heightened area of focus due to increased industry awareness of the
impact that share price discounts can have on investor sentiment,
alongwith the Board’s objective of improving the investment proposition
for all shareholders.
The Board conducts annual strategy reviews and considers investment
performance, shareholder views and developments in the marketplace
as well as emerging risks which could impact the Company regularly
throughout the year. The Board reviews changes to the shareholder
register at quarterly Board Meetings and engages the Broker to
continually monitor the discount at which the Company’s shares
trade, reporting regularly to the Board and buying back shares
whenappropriate.
The Board has committed to a number of initiatives with the target
of enhancing value to the Company’s shareholders, including the
introduction of a bi-annual tender offer and an active share buyback
policy (with a target of maintaining a single digit discount). At the
General Meeting held on 15 May 2025, shareholders approved
resolutions to support both of these proposals. Please refer to page 3 for
furtherdetails.
Investment:
Poor investment performance may have an adverse effect
onshareholder returns.
Heightened area of focus due to the current geopolitical tensions and
thepotential impact this could have on the Company’s portfolio.
At each Board Meeting, the Manager discusses portfolio performance
and strategy with the Directors and performance against the benchmark
and the peer group is reviewed. The Manager also provides the Board
with quarterly reports. The portfolio is well diversified with typically 45-55
holdings, thereby reducing stock-specific risk. The Board formally reviews
the performance of the Manager and its terms of appointment annually.
page 20 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
Principal Risks Mitigation
Other financial:
The Company invests principally in Continental European
quoted smaller companies and its principal risks are therefore
market related with short term risk arising from the volatility in
the prices of the Company’s investments and foreign exchange.
Events such as terrorism, disease (such as a global pandemic),
protectionism, inflation or deflation, changes in regulation
and taxation, excessive stock market speculation, economic
recessions, political instability and movements in interest rates
and exchange rates could affect share prices in particular
markets.
As with all small company investment trusts, there is liquidity
risk at times when the liquidity of the underlying portfolio is
poor, such as when smaller companies are out of favour or
during periods of adverse financial conditions. The portfolio
is focused on investments in smaller European companies
where the opportunities may be more attractive than in larger
companies but where overall portfolio liquidity may be more
challenging. This may result in difficulties in buying or selling
individual holdings in difficult markets. In addition, illiquid stock
markets may impact the discount of the Company’s share price
to the NAV per share.
No change in overall risk in year.
Portfolio diversification, both geographical and sectoral, can mitigate
the consequences of such risky events and the Board reviews the
portfolio with the Manager on a regular basis. It is not the Company’s
policy to hedge currency risk. The Board has also set investment
restrictions and guidelines which are adhered to and reported on by
the Manager. If required, it is also possible to raise the level of cash
held, thereby reducing the risk of declining share prices and the effect
of gearing on lower portfolio valuations. The portfolio’s liquidity is not
managed on the basis of timing short-term market fluctuations.
One of the benefits of an investment trust is that the Manager is rarely
forced to buy or sell individual holdings at inopportune times. The
Manager constantly reviews the underlying liquidity of the portfolio,
which is well diversified, and deals with a wide range of brokers to
enhance its ability to execute and minimise liquidity risk.
The liquidity of the portfolio is monitored by the Manager and reported
to the Board, and market conditions and their impacts are considered.
The Company’s liquidity risk is managed on a daily basis by the
Manager in accordance with established policies and procedures
in place.
Further details on the financial risks arising from the Company’s
financial instruments, together with the policies for managing these risks
are included in Notes 15 to 20 to the financial statements.
Discount volatility:
As with all small company investment trusts, discounts can
fluctuate significantly both in absolute terms and relative to
their peer group, this can also lead to issues with respect to
the liquidity of the Company’s shares.
Despite the Company’s discount narrowing during the year discount
volatility remains a significant area of Board focus.
The Board and Manager actively monitor the discount of share price
to NAV per share and seek to influence this through regular share
buybacks in line with the revised policy, effective marketing and liaising
closely with the Company’s Broker.
The Board receives regular reports on the discount level of the
Company, its peer group, and the wider investment trust sector which
informs any decision to buy back shares. The Board monitors liquidity
of the Company’s shares and encourages the Manager to market the
Company’s shares.
Principal and Emerging Risks continued
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 21
Principal Risks Mitigation
Regulatory:
The Company carries on business as an investment trust and
has been approved as such by HM Revenue & Customs subject
to it continuing to meet eligibility conditions and ongoing
requirements. As a result, it is not liable to corporation tax on
capital gains. Breach of Section 1158 of the Corporation Tax
Act 2010 could lead to the Company being subject to tax on
chargeable gains.
Breach of regulatory rules could also lead to suspension of
the Company’s Stock Exchange listing, financial penalties or a
qualified audit report.
No change in overall risk in year.
The Company Secretary and the Company’s professional advisers
provide reports to the Board in respect of compliance with all
applicable rules and regulations.
The Company complied with all applicable rules and regulations
including AIFMD, the Packaged Retail and Insurance-based Products
Regulation and the second Markets in Financial Instruments Directive
during the year.
The Administrator monitors the Company’s compliance with Section
1158 of the Corporation Tax Act 2010 including revenue forecasts
and the amount of proposed dividends to ensure the rules are not
breached. The results are reported to the Board at each meeting.
The Administrator monitors compliance with the Listing Rules of the
Financial Conduct Authority and compliance with the principal rules is
reviewed by the Directors at each Board Meeting.
The Board and AIFM also monitor changes in legislation which may
have an impact on the Company.
Operational:
In common with most other investment trust companies,
the Company has no employees. The Company is therefore
reliant on the services provided by third parties such as the
Manager, the Administrator and the Custodian (as a delegate
of the Depositary). Disruption or failure of the Manager’s or
Administrator’s systems, or those of other third-party service
providers could lead to an inability to provide accurate
reporting and monitoring of the Company’s financial position
or a breach of regulatory and legal regulations.
No change in overall risk in year.
The Board and the Audit Committee receive regular reports on the
operation of internal controls to mitigate against the risk of failure,
including those at the Manager, the Administrator and the Custodian as
explained in more detail within Risk Management and Internal Control
on pages 36 and 37. These reports include controls over risks of cyber
security. These have been tested and monitored throughout the year
which is evidenced from their control reports regarding their internal
controls which are reported on by their reporting accountants. Quarterly
reports are also received from the Depositary which is responsible for
overseeing the safekeeping of all custodial assets of the Company.
In addition, the Manager is in regular contact with service providers
regarding business operations and continuity planning, and has
reported no matters of concern.
Cyber security:
The threat of cyber attack is regarded as being as important
as more traditional physical threats to business continuity and
security. The Company has limited direct exposure to cyber
risk. However, the Company’s operations or reputation could
be affected if any of its service providers suffered a major cyber
security breach.
Continued area of Board focus due to ongoing geopolitical tensions and
the potential security risks posed by new technologies.
The Board monitors the preparedness of its service providers and
is satisfied that the risk is given due priority. The Manager provides
a report to the Board at each meeting that covers cyber risk. The
Company benefits from the network and information technology
controls of the Manager around the security of data.
The annual review of service providers includes a consideration of
cyber risk. As part of this review, internal controls reports for each
service provider are reviewed to ensure that suitable cyber security
controls are in place.
page 22 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
Principal and Emerging Risks continued
Principal Risks Mitigation
Environmental, social and governance (“ESG”):
A key risk is that the Manager invests in a company which has
poor ESG practices. It is the Manager’s opinion that companies
with poor standards of ESG are likely to underperform over the
long-term. Key ESG risks include:
Environmental
•
Climate change and greenhouse gas emissions (“GHG”)
•
Resource depletion, including water
•
Waste and pollution
Social
•
Working conditions, including no slavery or child labour
•
Health and safety
•
Employee relations and diversity
Governance
•
Executive pay
•
Board diversity and structure (in terms of age, gender,
educational and professional background)
•
Anti-bribery and corruption
No change in overall risk in year.
Montanaro is a certified B Corporation and therefore takes ESG
and sustainability issues seriously. A strong and consistently applied
investment process is in place and ESG risks are considered for every
company in which the Manager considers investing.
An ethical framework excludes investment in companies that generate
a significant proportion of sales from products with negative societal
impact. A bespoke ESG Checklist is completed for every company
by Montanaro’s team of Research Analysts and the Manager only
invests in those which pass the criteria set out in this Checklist, which
is designed to cover the aforementioned Environmental, Social and
Governance Risks.
Overview is provided by Montanaro’s Sustainability Committee, which
reviews ESG stock analyses and coordinates detailed engagement
activity with investee companies.
The Board receives reports at each Board Meeting which include ESG
considerations for new and existing investments.
Manager:
Should the Manager not be in a position to continue to
manage the Company, performance may be impacted.
No change in overall risk in year.
Montanaro has one of the largest specialist teams in the UK focusing
on quoted European smaller companies. Montanaro operates a
team approach in the management of the investment portfolio which
mitigates against the impact of the departure of any one member of
the investment team. The Manager is financially robust, and keeps the
Board informed of developments within its business.
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 23
SECTION 172(1) OF THE COMPANIES ACT 2006
Section 172(1) of the Companies Act 2006 (the “Act”) requires
Directors to act in good faith and in a way that is the most likely
to promote the success of the Company. In doing so, Directors
must take into consideration the interests of the various
stakeholders of the Company, the impact the Company has
on the community and the environment, take a long-term view
of consequences of the decisions they make as well as aim to
maintain a reputation for high standards of business conduct
and fair treatment between the members of the Company.
Fulfilling this duty naturally supports the Company in achieving
its Investment Objective and helps to ensure that all decisions
are made in a responsible and sustainable way. In accordance
with the requirements of the Companies (Miscellaneous
Reporting) Regulations 2018, the Board explains below, how
the Directors have individually and collectively discharged their
duties under section 172(1) of the Act over the course of the
reporting period.
To ensure that the Directors are aware of, and understand,
their duties they are provided with a tailored induction,
including details of all relevant regulatory and legal duties
as a Director of a UK public limited company when they first
join the Board, and continue to receive regular and ongoing
updates and training on relevant legislative and regulatory
developments.
They also have continued access to the advice and services
of the Company Secretary, and when deemed necessary,
the Directors can seek independent professional advice. The
schedule of Matters Reserved for the Board, as well as the
Terms of Reference of its Committees are reviewed periodically
and further describe Directors’ responsibilities and obligations
and include any statutory and regulatory duties.
PRINCIPAL DECISIONS DURING THE YEAR ENDED 31 MARCH 2025
Examples of the Board’s principal decisions during the year, how the Board fulfilled its duties under section 172(1) of the Act and
the related engagement activities are set out below:
Principal decision Stakeholder Considerations and Engagement
Value-enhancing initiatives for
shareholders
Regular tender offers to improve liquidity:
Conscious of shareholders’ desire to improve the liquidity of the Company’s shares,
the Board is proposing a scheme to do this whilst remaining cognisant of the liquidity
constraints of the underlying portfolio. The Board is proposing to offer shareholders an
opportunity twice a year, around the time of the Interim and Final Results publication,
to tender their shares to the Company at a 5% discount to NAV (reflecting the wider
spreads amongst smaller companies and the cost associated with the exercise). Each
tender offer will be limited in total to a maximum of 5% of the Company’s shares in
issue in order to protect existing shareholders and facilitate liquidity management
in the underlying portfolio. It is hoped that these regular tender opportunities will
improve liquidity for all shareholders and not engender the need for investors to take
such opportunities that occur with one-off tenders. Subject to the necessary authority
being granted, the first tender offer is expected to take place in Autumn 2025 following
the Interim Results.
Active share buyback policy:
The Board has revised its buyback policy in light of changing expectations amongst
shareholders and has pursued an active share buyback policy. The primary purpose
is to reduce the discount volatility (and therefore share price volatility) seen in
recent years, during which the Company’s shares have traded both at a premium
and a discount to Net Asset Value. In normal market circumstances, the Board will
target a single digit discount which, combined with the periodic tenders, should
provide reduced discount volatility. The Board is also conscious of the accretion to
NAV of share buybacks at a discount and believes this policy will be of benefit to all
shareholders.
Directors’ Duties
page 24 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
Principal decision Stakeholder Considerations and Engagement
Value-enhancing initiatives for
shareholders (continued)
Reduced management fees:
The Board has conducted a thorough review of all costs and expects the ongoing
charges figure (OCF) to remain below 1% in the future. The Board has negotiated
a further reduction in the management fee (the second in four years). However, it
continues to recognise the significant resource intensity of Montanaro’s extremely
thorough and detailed research-based investment process. The Manager has agreed
to the following reductions in management fees (all on a per annum basis) from 0.90%
to 0.825% of the market capitalisation of the Company up to £500 million; from 0.75%
to 0.70% between £500 – £750 million; and (unchanged) 0.65% above £750 million.
The reduction in fees took effect on 1 April 2025.
To approve interim dividends
during the year
The Company must comply with the provisions of Section 1158 of the Corporation Tax
Act 2010 which states that it must not retain more than 15% of its income for each
accounting period and the Board balanced its regulatory obligations with those of its
shareholders. As a result, the Board paid an increased interim dividend of 0.3 pence
per Ordinary share in January 2025 and has declared a second interim dividend of
0.96pence per Ordinary share. This increase reflects the expected income generated
by the Company’s portfolio, balanced by the Board’s intention to maintain a relatively
consistent level of dividend.
As mentioned in the Chairman’s Statement on page 3, the Board has decided to
move to a cycle of paying two interim dividends per annum in or around January
and August. The purpose of the change being to align dividend payments with the
release of the Annual and Interim Reports. This represents a change from the previous
dividend payment cycle of paying an interim dividend in January and a final dividend
inSeptember.
The new dividend policy has therefore been updated to include the following additional
wording “Under normal market conditions the Company will pay two interim dividends
per year, aligning with the release of the Annual and Interim Reports.”, please refer to
page 18 for the full text of the new dividend policy.
Board composition Hillary Williams was appointed to the Board with effect from 6 September 2024.
MsWilliams brings extensive experience as a senior financial services marketing leader
to the Board, thus adding a new skill set to the Board; this benefits the governance of
the Company and insight on a key aspect of business operations.
BUSINESS CONDUCT
The Matters Reserved for the Board, Board Committees’
Terms of Reference, the Share Dealing Code and other Board
policies are all reviewed on at least an annual basis and the
Directors ensure that they appropriately define obligations
and correct procedures. The Report of the Audit Committee,
which can be found on pages 36 to 38 of this Report, further
explains how the Committee reviews the risk management and
internal controls of the Company. This includes satisfying itself
that relevant systems and controls in place remain effective
andappropriate.
Directors’ Duties continued
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 25
STAKEHOLDERS
The Board seeks to understand the needs and priorities of the Company’s stakeholders and these are taken into account during
all its discussions and as part of its decision-making. While as an externally managed investment company, the Company does
not have any employees or customers, its key stakeholders include:
Stakeholders Board engagement
Shareholders The Company has more than 1,200 shareholders. Over the years, the Company has developed
various ways of engaging with its shareholders, in order to gain an understanding of the views of
our shareholders. These include:
•
Annual General Meeting – The Company welcomes attendance from shareholders at its
Annual General Meeting. The Manager delivers a presentation and all shareholders have an
opportunity to meet the Directors and ask questions. The Board greatly values the feedback
and questions it receives from shareholders and takes action or makes changes as and when
appropriate;
•
Presentations – The annual and interim results, as well as monthly factsheets are available
on the Company’s website. Feedback and/or questions the Company receives from the
shareholders help the Company to evolve its reporting, aiming to render the reports and
updates transparent and understandable; and
•
Investor Relations updates – At every Board meeting, the Directors receive updates on the
share trading activity, share price performance and any shareholders feedback, as well as any
publications or comments in the press.
The Manager Maintaining a close and constructive working relationship with the Manager is crucial as the
Board and the Manager both aim to continue to achieve consistent, long-term returns in line
with the Company’s Investment Objective. Important components in the collaboration with the
Manager, which are representative of the Board’s culture are:
•
Encouraging open discussion with the Manager;
•
Recognising that the interests of shareholders and the Manager are for the most part well
aligned, adopting a tone of constructive challenge, balanced when those interests are not fully
congruent by robust negotiation of the Manager’s terms of engagement; and
•
Willingness to make the Directors’ experience available to support the Manager in the sound,
long-term development of its business and resources, recognising that the long-term health
of the Manager is in the interests of shareholders in the Company.
Other service providers,
including:
the Company Secretary,
the Administrator, the
Registrar, the Depositary,
the Custodian and the
Broker
The Board maintains regular contact with its key external providers, both through the Board
and Committee meetings, as well as outside of the regular meeting cycle. Their advice, as well as
needs and views are routinely taken into account. In addition, the Board also undertakes periodic
reviews of the external service providers and addresses any concerns raised in those reviews. It
also holds relationship meetings and formally hears, and acts on, their feedback, as appropriate.
Banks In recognition of the importance of funding availability, the Company aims to demonstrate to
lenders that it is a well-managed business, and in particular, that the Board focuses regularly and
carefully on the management of risk.
Community and
Environment
Our engagement with the community and the environment can be found on page 26. A detailed
ESG Report can be found on pages 10 and 11.
page 26 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
CULTURE
During the year, the Directors confirmed the Company’s
culture and values and has worked to incorporate these
behaviours and processes into the annual review of the
Manager, strategic planning, the annual evaluation of Board
effectiveness and reporting to stakeholders – thus embedding
consideration of stakeholders’ interests, long-term perspective,
maintaining reputation for fairness and high standards of
governance, corporate reporting and business conduct more
generally in the Company’s culture and processes.
DECISION-MAKING
The importance of stakeholder considerations, in particular
in the context of decision-making, is regularly brought to the
Board’s attention by the Company Secretary and taken into
account at every Board meeting. A paper reminding Directors
of that is tabled at the start of every Board meeting. For
example, the strategic planning discussions involve careful
considerations of the longer-term consequences of any
decisions and their implications on shareholders and other
stakeholders.
COMMUNITY AND ENVIRONMENT
The Manager is a signatory to the Principles for Responsible
Investment, the UK Stewardship Code, the Carbon Disclosure
Project, the LGPS Code of Transparency and the Net Zero
Asset Managers initiative. In June 2019, Montanaro became
a B Corporation, a business certified for meeting the highest
verified standards of social and environmental performance,
transparency and accountability.
The Board recognises that the Company has certain
responsibilities to its shareholders, stakeholders and wider
society. While the Company itself does not have employees or
offices, the Board endorses the Manager’s policy to invest the
Company’s funds in a socially responsible manner. ESG factors
are an integral part of the investment process. In addition,
the Manager does not invest in companies it deems to be
harmful to society or the environment; this includes companies
involved in tobacco, fossil fuels, gambling, adult entertainment,
weapons manufacturing, alcohol and high interest rate lending.
Similarly, they do not invest in companies that conduct animal
testing, unless it is required by law for healthcare purposes.
The Board monitors investment activity to ensure that it is
compatible with the policy and receives periodic updates
from the Manager on its initiatives and performance against
its ESG goals.
The Chairman’s Statement on pages 3 to 6, the Manager’s
Report on pages 7 to 9, the Twenty Largest Holdings on
page14, all form part of this Strategic Report, which has been
approved by the Board of Directors.
By order of the Board
JUNIPER PARTNERS LIMITED
Company Secretary
18 June 2025
Directors’ Duties continued
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 27
The Directors of the Company who were in office during the financial year and up to the date of signing the financial statements were:
Richard Curling – Chairman of the Board and Chair of the Nomination Committee
Date of Appointment: 2November 2015
Richard was appointed to the Board as an independent non-executive Director in 2015
and was appointed as Chairman of the Board on 29August 2018. Richard has over
30years’ experience as a fund manager and is currently an investment director at Jupiter
Fund Management Plc. He has extensive experience of both investment trusts and small
company investing.
Relevant skills and experience and reasons for re-election:
Richard has comprehensive experience of investment management and the wider
Investment Company sector. This has provided a strong basis for assessing, and where
appropriate challenging, the Manager, on the Company’s performance, and in leading the
Board in strategic discussions. Following a rigorous board evaluation process, the Board
agreed that Richard continues to be an effective member of the Board. As noted in the
Chairman’s Statement on page 4, Richard will retire from the Board on 31December 2025,
at which point Gordon Neilly will step into the role of Chairman.
Caroline Roxburgh – Senior Independent Director and Chair of the Audit Committee
Date of Appointment: 8November 2017
Caroline is a Chartered Accountant and was previously a partner at
PricewaterhouseCoopers LLP until 2016. She has over 30 years’ business, finance and
audit experience across a number of industries and sectors bringing extensive experience
to the Board. Caroline also holds a number of other board positions including as a non-
executive director of the Edinburgh Worldwide Investment Trust plc. She is an experienced
chair of audit and risk committees and holds that position on other boards of which she is
a member.
Relevant skills and experience and reasons for re-election:
Caroline’s experience as a senior board advisor, assurance partner and chartered
accountant brings valuable business, financial, governance and risk management skills
to the Board, which enables her to assess the financial position of the Company, to lead
discussions regarding the Company’s risk management framework and risk appetite
and to contribute to developing the Company’s strategy. Her broad range of experience
as a chair of audit and risk committees helps inform her role as Chair of the Company’s
Audit Committee. Given her experience on the Board, Caroline was appointed Senior
Independent Director on 31December 2020. Following a rigorous board evaluation
process, the Board agreed that Caroline continues to be an effective member of the Board.
Board of Directors
page 28 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
Gordon Neilly – Chair of the Remuneration Committee
Date of Appointment: 21September 2020
Gordon has considerable experience and knowledge of investment trusts. Gordon is Head
of European Credit, Clearlake Credit, a director of Clearlake Capital Group UK Limited and
a non-executive director of Personal Assets Trust plc. He was previously Chief of Staff at
Standard Life Aberdeen. Prior to this he was Head of Strategy and Corporate Activity at
Aberdeen Standard Investments, Co-Chief Executive Officer of Cantor Fitzgerald Europe,
Chief Executive of Intelli Corporate Finance and Finance and Business Development
Director of Ivory & Sime.
Relevant skills and experience and reasons for re-election:
Gordon has gained an in-depth knowledge of strategic matters, extensive leadership
skills and possesses a wealth of experience in business transformation and developing
strategies through his executive roles, particularly within the asset and wealth
management sectors and investment companies. Gordon’s diverse skill-set and strategic
awareness facilitates open discussion and allows for constructive challenge in the
boardroom, which brings a unique perspective and insight to the Board. Following a
rigorous board evaluation process, the Board agreed that Gordon continues to be an
effective member of the Board.
Hillary Williams – Non-Executive Director
Date of Appointment: 6 September 2024
Hillary is an experienced senior financial services marketing leader. She was, until June
2023, the Global Director of Brand and Marketing of M&G PLC overseeing teams in the UK,
Asia and Europe. Prior to this she was Brand and Marketing Director for Prudential UK. She
joined the M&G Group from AEGON UK in 2016 where she held the position of Customer
Marketing Director. She previously held Marketing Director positions at Sainsbury’s Bank
and UKI Partnerships, and more recently, Interim Marketing Director at Royal London.
Hillary was a member of Prudential’s Independent Governance Committee from 2020 to
2022.
Relevant skills and experience and reasons for re-election:
Hillary has a deep understanding of financial marketing, brand strategy, and customer
engagement. She brings invaluable expertise to the Board, enabling her to assess the
Company’s market positioning, drive discussions on strategic marketing initiatives, and
contribute to the development of growth strategies. Following a rigorous board evaluation
process, the Board agreed that Hillary is an effective member of the Board.
Board of Directors continued
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 29
Directors’ Report
The Directors present the Annual Report and Accounts of the
Company for the year ended 31 March 2025.
For the purposes of compliance with Disclosure Guidance
and Transparency Rules (“DTR”) DTR 4.1.5 R (2) and
DTR4.1.8R, the required content of the Management Report
can be found in the Strategic Report and this Directors’
Report. The following disclosures required to be included
in this Directors’ Report have been incorporated by way of
reference to other sections of this report and should be read
in conjunction with this report:
•
Corporate Governance Statement – refer to pages 33 to
35 of this report;
•
Strategy and relevant future developments – refer to the
Chairman’s Statement on pages 3 to 6 and the Manager’s
Report on pages 7 to 9; and
•
Financial risk management objectives and policies. An
analysis of the portfolio along with further information
about financial instruments and capital disclosures is
provided in Notes 15 to 20 on pages 63 to 66.
The outlook for the Company is set out in the Chairman’s
Statement on pages 3 to 6. Principal and emerging risks can
be found on pages 19 to 22, with further information onrisk
management objectives in Notes 15 to 20 to the financial
statements.
RESULTS AND DIVIDENDS
The results for the year are set out in this Annual Report and
Accounts. A first interim dividend of 0.3p per Ordinary share
was paid on 22January 2025. A second interim dividend of
0.96p will be paid on 7 August 2025 to shareholders on the
register on 27 June 2025.
DIRECTORS
Biographical details of the Directors, all of whom are
independent and non-executive, can be found on pages27
and 28. TheDirectors’ interests in the shares of the Company
are shown on page 41.
DIRECTOR INDEMNIFICATION AND INSURANCE
In addition to Directors’ and Officers’ liability insurance cover,
the Company’s Articles provide, subject to the provisions of
applicable UK legislation, an indemnity forDirectors.
Indemnities are in force as at the date of this report, and were
in force during the year, between the Company and each of its
Directors under which the Company has agreed to indemnify
each Director, to the extent permitted by law, in respect of
certain liabilities incurred as a result of carrying out his or her
role as a Director of the Company.
POWERS OF THE DIRECTORS
Subject to the provisions of the Companies Act 2006, the
Articles and to any directions given by the Company in general
meeting by special resolution, the business of the Company
is managed by the Board, which may exercise all the powers
of the Company whether relating to the management of the
business of the Company or not. In particular, the Board may
exercise all the powers of the Company to issue shares or
other securities and to borrow money and to mortgage or
charge all or any part of the Company’s assets.
CONFLICTS OF INTEREST
Each Director has a statutory duty to avoid a situation where
they have, or could have, a direct or indirect interest which
conflicts, or may conflict with the interests of the Company. A
Director will not be in breach of that duty if the relevant matter
has been authorised in accordance with the Articles. The
Board has approved a protocol for identifying and dealing with
conflicts and has resolved to conduct a regular review of actual
or possible conflicts and any authorised conflicts. No conflicts
or potential conflicts were identified during the year.
INVESTMENT MANAGEMENT AGREEMENT
Montanaro provides investment management services to the
Company and is the Company’s AIFM. With effect from 1April
2025, the Manager has agreed to a reduction in management
fees from 0.90% per annum. to 0.825% per annum of the
market capitalisation of the Company up to £500 million; from
0.75% to 0.70% per annum between £500 – £750 million;
and (unchanged) 0.65% per annum above £750 million.
Montanaro’s appointment may be terminated by either
party giving to the other not less than six months’ notice. The
investment management agreement may be terminated earlier
by the Company provided that a payment in lieu of notice,
equivalent to the amount the Manager would otherwise have
received during the notice period, is made.
CONTINUING APPOINTMENT OF THE MANAGER
In February 2025, the Remuneration Committee and the
Board formally reviewed the Manager’s appointment. In
carrying out its review, the Board considered the skills,
experience, resources and commitment of the Manager,
together with the investment performance during the year
and since its appointment. It also considered the length of
the notice period of the investment management agreement
and the fees payable to the Manager. Following this review,
it is the Directors’ opinion that the continuing appointment
of Montanaro as Manager and AIFM, on the terms agreed,
is in the interests of shareholders as a whole. Among the
reasons for this was the Manager’s continued strong long-term
performance, the greater strength and depth of the Manager’s
research team, as well as the stability and capability of the
team, which provided strong benefits to the Company.
page 30 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
DEPOSITARY AND CUSTODIAN
The Bank of New York Mellon (International) Limited acts as the
Company’s Depositary and Custodian in accordance with the
AIFM Directive. The Depositary’s responsibilities include cash
monitoring, segregation and safe keeping of the Company’s
financial instruments and monitoring the Company’s
compliance with investment limits and leverage requirements.
REGISTRAR
Equiniti has been appointed as the Company’s registrar.
The Registry Services Agreement may be terminated on
not less than six months’ notice. The Registrar is also
entitled to reimbursement of all disbursements and out of
pocketexpenses.
COMPANY SECRETARY AND ADMINISTRATOR
Juniper Partners Limited (“Juniper”) was appointed as the
Company’s Company Secretary and Administrator with
effect from 1July 2023. Juniper receives a base annual fee of
£145,000 plus 0.02% per annum on net assets of up to £1
billion, and 0.01% per annum on net assets over £1billion.
The Company Secretarial and Administration Agreement is
subject to six months’ written notice.
SUBSTANTIAL SHAREHOLDINGS
At 31 March 2025, the Directors were aware of the following
substantial shareholdings:
Number of
shares held
Percentage
held
Saba Capital Management 23,457,468 13.04
Interactive Investor (EO) 20,441,337 11.36
Hargreaves Lansdown (EO) 18,725,129 10.41
Montanaro Asset Management 12,548,491 6.97
1607 Capital Partners 9,943,392 5.53
AJ Bell (EO) 9,675,120 5.38
RBC Brewin Dolphin Ireland 8,695,661 4.83
Allspring Global Investment 8,214,170 4.57
RBC Brewin Dolphin 5,653,044 3.14
On 2 June 2025 the Company was notified that Montanaro
Asset Management owns 13,248,491 shares (8.01%) in the
Company.
On 3 June 2025 the Company was notified that Saba Capital
Management owns 8,208,953 shares (4.98%) in the Company.
On 6 June 2025 the Company was notified that Allspring Global
Investment owns 8,181,575 shares (5.00%) in the Company.
GOING CONCERN
In assessing the going concern basis of accounting, the
Directors have had regard to the guidance issued by the
Financial Reporting Council and have undertaken a rigorous
review of the Company’s ability to continue as a going concern.
The Directors have taken into account the Company’s
Investment Policy, which is described on page 17 and which is
subject to regular Board monitoring processes and is designed
to ensure that the Company is invested mainly in liquid, listed
securities. The Company retains title to all assets held by its
custodian, and has financial covenants relating to its bank
borrowings with which it complied during the year.
In performing the assessment of the Company’s ability to
meet its liabilities as they fall due, the Directors took into
consideration the following factors:
•
cash and cash equivalents balances and the portfolio of
readily realisable securities which can be used to meet
short-term funding commitments;
•
the ability of the Company to meet all of its liabilities and
ongoing expenses from its assets;
•
revenue, operating and finance cost forecasts for the
forthcoming year;
•
continued adherence to the loan covenants;
•
the ability of third-party service providers to continue to
provide services; and
•
consideration of a number of severe downside
scenarios, the impact of which would still leave the
Company with sufficient liquid assets to remain a
goingconcern.
Notes 15 to 20 to the financial statements set out the financial
risk profile of the Company and indicate the effect on its assets
and liabilities of falls and rises in the value of securities, market
rates of interest and changes in exchange rates.
The Directors believe, in light of the controls and review
processes noted above and bearing in mind the nature of
the Company’s business and assets and liabilities, that the
Company has adequate resources to continue in operational
existence for a period of at least twelve months from the
date of approval of the financial statements. For this reason,
they continue to adopt the going concern basis in preparing
theaccounts.
Directors’ Report continued
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 31
VIABILITY ASSESSMENT
In accordance with the AIC Code of Corporate Governance, the
Directors have assessed the prospects of the Company over
the coming three years. In order to assess the viability of the
Company, the Board is required to assess its future prospects
and has considered that a number of characteristics of its
business model and strategy were relevant to this assessment:
•
The Company’s objective is to achieve capital growth.
•
The Company’s investment policy, which is subject to
regular Board monitoring, means that the Company
is invested principally in the securities of Continental
European quoted smaller companies.
•
The Company is a closed-end investment trust, whose
shares are not subject to redemptions by shareholders.
•
The Company’s business model and strategy is not time
limited.
Also relevant were a number of aspects of the Company’s
operational arrangements:
•
The Company retains title to all assets held by the
Custodian under the terms of a formal agreement with
the Depositary and Custodian.
•
The borrowing facilities, which remain available until
September 2026, are also subject to formal agreements,
including financial covenants with which the Company
complied in full during the year.
•
Revenue and expenditure forecasts are reviewed by the
Directors at each Board Meeting.
In considering the viability of the Company, the Directors
carried out a robust assessment of the principal risks and
uncertainties which could threaten the Company’s objective
and strategy, future performance, liquidity and solvency,
including the impact of a significant fall in equity markets or
adverse currency movements on the Company’s investment
portfolio. These risks, their mitigations and the processes for
monitoring them are set out on pages 19 to 22 in Principal and
Emerging Risks, pages 36 and 37 in the Report of the Audit
Committee and in the notes to thefinancial statements.
The Directors have also considered:
•
The level of ongoing charges incurred by the Company
which are modest and predictable and that these were
covered by investment income and total 1% of average
net assets.
•
Future revenue and expenditure projections and the
potential impact of reduced dividend income.
•
The Company’s borrowing in the form of a fixed rate loan
facility of €10million and a €15million revolving credit
facility maturing on 13September 2026, the revolving
credit facility was fully drawn down at 31March 2025.
This loan was covered 15 times by the Company’s total
assets at 31March 2025 the Board expects to replace the
Company bank facilities at the end of the current term.
•
Its ability to meet liquidity requirements given the
Company’s investment portfolio consists principally of
Continental European quoted smaller companies which
can be realised. It is estimated that approximately 88% of
the portfolio could be liquidated under normal conditions
within seven trading days.
•
The ability to undertake share buybacks if required.
•
The estimated level of take up of the Company’s bi-annual
tender offer.
•
That the Company’s objective and investment policy
continue to be relevant to investors.
•
The Company has no employees, having only non-
executive Directors and consequently does not have
redundancy or other employment related liabilities
(including pensions) or responsibilities.
These matters were assessed over a three year period to June
2028, and the Board will continue to assess viability over three
year rolling periods, taking account of severe but plausible
scenarios. In the absence of any adverse change to the
regulatory environment and to the treatment of UK investment
trusts a rolling three year period represents the horizon over
which the Directors do not expect there to be any significant
change to the Company’s principal risks or their mitigation and
they believe they can form a reasonable expectation of the
Company’s prospects.
Based on their assessment, and in the context of the
Company’s business model, strategy and operational
arrangements set out above, the Directors have a reasonable
expectation that the Company will be able to continue in
operation and meet its liabilities as they fall due over the
three year period to June 2028. For this reason, the Board
also considers it appropriate to continue adopting the going
concern basis in preparing the Report and Accounts.
CAPITAL STRUCTURE
The Company’s structure is composed solely of Ordinary
shares. At 31March 2025 there was 179,924,679 Ordinary
shares in issue and 9,502,921 shares held in Treasury. The
Company bought back 9,502,921 Ordinary shares in the year
to 31March 2025.
page 32 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
Directors’ Report continued
GREENHOUSE GAS EMISSIONS
All of the Company’s activities are outsourced to third parties.
As such it does not have any physical assets, property,
employees or operations of its own and does not generate any
greenhouse gas or other emissions or consume any energy
reportable under the Companies Act 2006 (Strategic Report
and Directors’ Report) Regulations 2013 or the Companies
(Directors’ Report) and Limited Liability Partnerships (Energy
and Carbon Report) Regulations 2018, implementing the
UK Government’s policy on Streamlined Energy and Carbon
Reporting.
CRIMINAL FINANCES ACT 2017
The Board is fully committed to complying with applicable
legislation and statutory guidelines, including the UK’s Criminal
Finances Act 2017, designed to prevent tax evasion in the
jurisdictions in which the Company operates.
FINANCIAL INSTRUMENTS
The Company’s financial instruments comprise its investment
portfolio, cash balances, bank debt and debtors and creditors
that arise directly from its operations, such as sales and
purchases awaiting settlement and accrued income. The
financial risk management objectives and policies arising from
its financial instruments and the exposure of the Company to
risk are disclosed in Notes 15 to 20 to the financial statements.
TREASURY SHARES
Shares which are bought back by the Company pursuant to
the share buyback authority may be cancelled or held by the
Company in treasury and subsequently re-issued. It is the
Board’s intention that any shares bought back by the Company
will be held in treasury. Shares held in treasury will not carry
any voting rights, dividends payable in respect of them will be
suspended and they will have no entitlements on a winding-up
of the Company. It is the Board’s policy that shares will only
be re-issued from treasury either at a price representing a
premium to the NAV per share at the time of re-issue, or at
a discount to the NAV per share provided that such discount
is lower than the weighted average discount to the NAV per
share when they were bought back by the Company. It is
also the Board’s policy that shares may be held in treasury
indefinitely. The Board believes that the treasury shares policy
will improve liquidity in the shares and help to maintain the
size of the Company. Furthermore, the Board believes that
the re-issuance of shares from treasury at a discount to the
NAV per share within the parameters described above will, in
conjunction with the Company’s share buyback policy, ensure
that the overall effect of the ‘round trip’ of repurchasing
shares and subsequently reissuing them from treasury will be
an enhancement to the NAV per share. As at 17June 2025,
being the latest practicable date before the publication of the
Annual Report and Accounts, there were 159,895,306 Ordinary
shares in issue. 29,532,294 shares are held in treasury.
Accordingly, the total number of voting rights in the Company
is 159,895,306.
INDEPENDENT AUDITOR
PricewaterhouseCoopers LLP (“PwC”) has confirmed its
willingness to continue in office as the Auditors of the
Company (the “Auditors”). A resolution to re-appoint PwC
as the Auditors to the Company and to authorise the Audit
Committee to determine the Auditors’ remuneration will be
proposed to the forthcoming Annual General Meeting.
DISCLOSURE OF RELEVANT INFORMATION TO THE AUDITOR
Having made the requisite enquiries, so far as the Directors
are aware, there is no relevant audit information (as defined
by Section 418(3) of the Companies Act 2006) of which the
Company’s Auditors are unaware and each Director has taken
all steps that ought to have been taken to make themselves
aware of any relevant audit information and to establish that
the Company’s Auditors are aware of that information.
ANNUAL GENERAL MEETING
The Notice of Annual General Meeting to be held on
4September 2025 is set out on pages 74 to 81.
Resolutions 1 to 10 will be proposed as Ordinary Resolutions
and Resolutions 11 to 13 will be proposed as Special
Resolutions. Please refer to pages 77 and 78 for a full
explanation of all resolutions.
Recommendation
The Directors consider that the passing of each of the
resolutions to be proposed at the Annual General Meeting is
in the best interests of the Company and its shareholders as a
whole and they unanimously recommend that all shareholders
vote in favour of these resolutions.
For and on behalf of the Board
JUNIPER PARTNERS LIMITED
Company Secretary
18 June 2025
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 33
Corporate Governance Statement
The Corporate Governance Statement forms part of the Directors’ Report.
STATEMENT OF COMPLIANCE
The Board has considered the Principles and Provisions of
the AIC Code of Corporate Governance published in February
2019 (“AIC Code”). The AIC Code addresses the Principles and
Provisions set out in the 2018 UK Corporate Governance Code
(the “UK Code”), as well as setting out additional Provisions on
issues that are of specific relevance to the Company.
The Board considers that reporting against the Principles
and Provisions of the AIC Code, which has been endorsed
by the Financial Reporting Council, provides more relevant
information to shareholders.
During the year, the Company has complied with all of the
recommendations of the AIC Code.
The Company is committed to maintaining the highest
standards of governance and will ensure that it continues to
meet all applicable requirements.
The AIC Code is available on the AIC website www.theaic.co.uk.
It includes an explanation of how the AIC Code adapts the
Principles and Provisions set out in the UK Code to make
themrelevant for investment companies. The UK Code is
available from the Financial Reporting Council’s website at
www.frc.org.uk.
A revised AIC Code was issued in August 2024, and will come
into effect for accounting periods beginning on or after
1January 2025 (with the exception of Provision 34 which
will come into effect for accounting periods beginning on or
after 1January 2026). The Board will continue to review the
Company’s governance arrangements to ensure ongoing
compliance with the updated AIC Code.
THE CHAIRMAN OF THE COMPANY
Mr Curling was appointed to the Board as an independent
non-executive Director in 2015, and as Chairman of the
Board on 29August 2018. His biography can be found on
page 27. Mr Curling is also a member of the Audit Committee
and Chair of the Nomination Committee. The Board believes
it is appropriate for Mr Curling to be a member of both
Committees as he is considered to bring valuable experience,
to be independent and there are no conflicts of interest.
THE COMPANY SECRETARY
The Board has direct access to the services of the Company
Secretary who is responsible for ensuring Board and
Committee procedures are followed and that applicable
regulations are complied with. The Company Secretary is also
responsible to the Board for ensuring the timely delivery of the
information and reports which the Directors require and that
statutory obligations are met.
THE BOARD
The Board consists solely of non-executive Directors. All
Directors are considered by the Board to be independent of
the Manager. Under the requirements of the Articles, Directors
are subject to election at the next Annual General Meeting after
their appointment. New Directors receive an induction from the
Manager and Company Secretary on joining the Board, and all
Directors are encouraged to attend relevant training courses
and seminars.
Individual Directors may, at the expense of the Company,
seek independent professional advice on any matter that
concerns them in the furtherance of their duties. The Company
maintains appropriate directors’ and officers’ liability insurance.
The Board is formed of four independent non-executive
Directors. Mr Curling is the Chairman of the Board and Chair of
the Nomination Committee, MsRoxburgh is Chair of the Audit
Committee and Senior Independent Director and Mr Neilly is
Chair of the Remuneration Committee.
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
The Board currently meets at least four times a year and,
in addition, informally on a regular basis. It receives full
information on the Company’s investment performance,
assets, liabilities and other relevant information in advance of
Board meetings. The Board has approved a formal schedule
of matters reserved for it, including, but not limited to: overall
strategy, investment policy, capital structure, gearing and
monitoring the performance of the Manager.
page 34 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
The following table sets out the number of scheduled Board and Committee meetings held during the year ended 31March
2025 and the number of meetings attended by each Director.
Board Audit Nomination Remuneration
Number of
meetings held
Number of
meetings
attended
Number of
meetings held
Number of
meetings
attended
Number of
meetings held
Number of
meetings
attended
Number of
meetings held
Number of
meetings
attended
R M Curling 4 4 3 3 1 1 1 1
CA Roxburgh 4 4 3 3 1 1 1 1
G Neilly 4 4 3 3 1 1 1 1
H Williams* 2 2 2 2 – – 1 1
* Appointed as a Director on 6September 2024, meetings held prior to this date are not included in Ms Williams’ attendance figures.
The Board also met informally on a number of occasions during the year, including a significant amount of ad-hoc meetings in
respect of the strategic initiatives.
INDEPENDENCE OF DIRECTORS AND TENURE
The Board ensures that it has the appropriate balance of
skills, experience, knowledge and independence in order to
remain effective and regularly reviews the independence of its
members and considers all of the Directors to be independent
in line with the 2019 AIC Code.
The Board does not feel that it would be appropriate to set a
specific tenure limit for individual Directors or the Chairman of
the Board or its Committees. Instead, the Board will regularly
review the size and structure of the Board with the aim of
new directors bringing the challenge of fresh thinking into the
Board’s discussions. By doing so, the Board intends to maintain
a broad range of experience in the Board, with Directors who
have served a range of periods on the Board of the Company.
This will ensure that on each occasion the Board enters into
new investment commitments, several members have direct
personal experience of negotiating previous commitments
with the Manager. This is intended to preserve the cumulative
experience and deep understanding of the Company, its
commitments and investment portfolio, while benefiting
from new perspectives and helping to promote diversity of
perspective. It is believed that the Directors provide, individually
and collectively, the breadth of skill and experience to manage
the Company and ensuring its long-term sustainable success.
The basis on which the Company aims to generate value over
the longer term is set out in the Business Model and Strategy
on pages 17 and 18.
As noted in the Chairman’s Statement on page 4, Richard
Curling will retire from the Board on 31 December 2025, at
which point Gordon Neilly will step into the role of Chairman.
PERFORMANCE EVALUATION
During the year, the Directors undertook a formal and rigorous
performance evaluation and also considered the output
from the previous year’s evaluation. The process was led by
the Chairman and was designed to assess the strengths and
independence of the Board together with the performance of
its Committees, the Chairman and individual Directors.
The Board completed evaluation questionnaires which covered
a range of areas including processes and effectiveness, size and
composition, and corporate governance and were also intended
to analyse the focus of meetings and assess whether they are
appropriate, or if any additional information may be required
to facilitate future Board discussions. The evaluation of the
Chairman was carried out by the other Directors of the Company
and the process was led by the Senior IndependentDirector.
The results of the Board evaluation process were reviewed and
discussed by the Board. The Board concluded that it remains
effective and highlighted the continuing attention to succession
planning and assessing developments in the retail investors’
information needs and investment platforms as areas of focus.
ELECTION/RE-ELECTION OF DIRECTORS
Under the provisions of the Company’s Articles, the Directors
retire by rotation at least every three years, however, in
accordance with corporate governance best practice as set out
in the AIC Code, all Directors should put themselves forward
for re-election every year. As such, each of the Directors is
subject to annual re-election by the shareholders at the Annual
General Meeting and Mr Curling, Ms Roxburgh and Mr Neilly
have confirmed that they will be standing for re-election at
the forthcoming Annual General Meeting. As this is the first
Annual General Meeting since her appointment as a Director,
MsWilliams will be standing for election.
VOTING POLICY ON PORTFOLIO INVESTMENTS
The Manager, in the absence of explicit instructions from the
Board, is empowered to exercise discretion in the use of the
Company’s voting rights. Environmental, social and governance
factors are taken into account by the Manager as part of
its investment analysis and decision making processes. The
Board is pleased that the Manager has been a signatory of
the UK Stewardship Code since its publication in 2010 and its
statement can be found on its website www.montanaro.co.uk.
In June 2019, Montanaro became a B Corporation, a business
certified for meeting the highest verified standards of social and
environmental performance, transparency and accountability.
Corporate Governance Statement continued
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 35
RELATIONS WITH SHAREHOLDERS
The Company welcomes the views of shareholders and places
great importance on communication with its shareholders.
Please refer to page 25 for details of engagement activity in the
year to 31 March 2025.
BOARD COMMITTEES
The Board has established three Committees to assist with
its operations. Throughout the year the following Committees
have been in operation, namely the Audit Committee, the
Remuneration Committee and the Nomination Committee.
Each of the Committees’ delegated responsibilities are clearly
defined in formal terms of reference which are available on the
Company’s website https://montanaro.co.uk/trust/mesct.
Audit Committee
The Report of the Audit Committee is included on pages 36 to
38 and forms part of this statement.
Remuneration Committee
The Remuneration Committee, chaired by Mr Neilly, comprises
the full Board and reviews the appropriateness of the
Manager’s continuing appointment and determines the level
of Directors’ fees. The Directors’ Remuneration Report on
pages 39 to 41 provides information on the remuneration
arrangements for the Directors of the Company.
Nomination Committee
The Nomination Committee, chaired by Mr Curling, comprises
the full Board and is convened for the purpose of considering
the appointment of new Directors as and when considered
appropriate. The Board is composed solely of non-executive
Directors and has equal male and female representation.
The Directors will ensure it adheres to set objectives in relation
to the diversity of the Board as and when they seek to appoint
additional Directors, in the future. The Board considers the
guidance set out in the Hampton-Alexander Report and the
Parker Review in considering the composition of the Board
and in its recruitment and succession planning. The Company’s
Board diversity policy is shown below.
DIVERSITY AND INCLUSION
The Board’s policy on diversity is to ensure that the Directors
on the Board have a broad range of experience, skills and
knowledge, with diversity of thinking, background and
perspective. Appointments to the Board are made on merit
against objective criteria, having regard to the benefits of
diversity and the current and future needs of the business and
the other factors set out in the AIC Code.
The Board continues to develop its succession planning in line
with these recommendations. In accordance with Listing Rule
6.6.6 (9)(a) the tables below, in prescribed format, show the
gender and ethnic background of the Directors at 18June 2025.
Gender identity or sex
Number
of Board
members
Percentage on
the Board
Number of
senior positions
on the Board
Men 2 50 1
Women 2 50 1
Not specified/prefer not to say – – –
Ethnic background
Number
of Board
members
Percentage on
the Board
Number of
senior positions
on the Board
White British or other
White (including minority
whitegroups)
4 100 2
Mixed/Multiple Ethnic Groups – – –
Asian/Asian British – – –
Black/African/Caribbean/
BlackBritish
– – –
Other Ethnic group – – –
Not specified/prefer not to say – – –
The data in the above tables was collected through self-reporting
by the Directors.
The Board does not comply with the Listing Rule requirement
that there should be one ethnic minority Board member. The
small size of the Board is a constraint to achieving all of these
targets but the Board will actively take this into consideration in
future recruitment.
MODERN SLAVERY ACT 2015
As an investment trust, the Company does not provide goods
or services in the normal course of business and does not
have customers. Accordingly, the Directors consider that
the Company is not required to make any slavery or human
trafficking statement under the Modern Slavery Act 2015.
RISK MANAGEMENT AND INTERNAL CONTROLS
Details of the principal risks and internal controls applied by
the Board are set out on pages 19 to 22 and pages 36 and
37respectively.
By order of the Board
JUNIPER PARTNERS LIMITED
Company Secretary
18 June 2025
page 36 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
COMPOSITION OF THE COMMITTEE
The Board recognises the requirement for the Audit
Committee as a whole to have competence relevant to the
sector in which the Company operates and at least one
member with recent and relevant experience.
The Audit Committee is chaired by Ms Roxburgh, a Chartered
Accountant, who has recent and relevant financial experience,
and the Committee operates within clearly defined terms of
reference and comprises all the Directors. Given the size of
the Board, and Mr Curling’s experience, it is felt appropriate
for him to sit on the Audit Committee as permitted by the
AIC Code. The Directors have a combination of financial,
investment and business experience, specifically with respect
to the investment trust sector.
ROLE OF THE COMMITTEE
The duties of the Audit Committee include reviewing: the
annual and interim financial statements; the system of internal
controls; and the terms of appointment and remuneration of
the Auditor, PricewaterhouseCoopers LLP (“PwC”) including its
independence and objectivity.
The Audit Committee met three times during the year. The
attendance of each of the members is set out on page 34. In
the course of its duties throughout the year, the Committee
had direct access to PwC, Juniper, BNYM and Montanaro.
Amongst other things, the Audit Committee considered and
reviewed the following matters and reported thereon to
theBoard:
•
The annual and half-yearly reports and accounts and
results announcements;
•
The accounting policies of the Company;
•
The principal risks faced by the Company and the
effectiveness of the Company’s internal control and risk
management environment, including consideration of the
assumptions underlying the Board’s Viability Assessment
and Statement;
•
The effectiveness of the audit process and related non-
audit services and the independence and objectivity
of PwC, its appointment, remuneration and terms of
engagement;
•
The implications of proposed new accounting standards
and regulatory changes;
•
The receipt of AAF (01/06) and ISAE 3402 reports or their
equivalent from the Manager, Administrator, Custodian
and other service providers; and
•
Whether the Annual Report and Accounts is fair, balanced
and understandable.
RISK MANAGEMENT
The Board has established an ongoing process designed
to meet the particular needs of the Company in managing
the risks to which it is exposed, consistent with the related
guidance issued by the Financial Reporting Council.
Montanaro’s Compliance and Risk department and Juniper
provide regular control reports to the Audit Committee and the
Board covering administration, risk and compliance matters.
A key risk summary is produced to identify the risks to which
the Company is exposed, the controls in place and the actions
being taken to mitigate them. The Board has a robust process
for considering the resulting risk matrix and reviews the
significance of the risks, reasons for any change and actions
arising as a result.
The Company’s principal risks and their mitigations are set
out on pages 19 to 22, with additional information provided in
Notes 15 to 20 of the financial statements.
The integration of these risks into the consideration of the
Viability Assessment and Statement on page 31 was also fully
considered by the Committee.
INTERNAL CONTROL
The Board is responsible for the Company’s systems of internal
controls and for reviewing their effectiveness. The Audit
Committee has reviewed and reported to the Board on these
controls which aim to ensure that the assets of the Company
are safeguarded, proper accounting records are maintained
and the financial information used within the business and for
publication is reliable.
The key procedures which have been established to provide an
effective internal control environment are outlined below:
•
Board procedures are set within clearly defined
parameters, as set out in matters specifically reserved for
the Board.
•
At every Board meeting the Directors review financial
information prepared by the Administrator, including
management accounts, forecasts of income and
expenditure and detailed analysis relating to the
performance of the Company.
•
The Bank of New York Mellon (International) Limited, as
the Company’s Depositary, provides quarterly reports to
the Board and carries out daily independent checks on
cash and investment transactions.
•
The Bank of New York Mellon SA/NV is responsible
for the custody of the Company’s investments. Lists of
investments held are reconciled to the Company’s records
on a regular basis and a report on controls, which is
reviewed by a firm of independent reporting accountants,
is produced annually for consideration by the Audit
Committee.
Report of the Audit Committee
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 37
•
Investment management services are provided by
Montanaro, which is regulated by the Financial Conduct
Authority. At each Board meeting the Board monitors the
investment performance of the Company in comparison
to its stated Investment Objective, the benchmark index
and comparable investment trusts. The Board also
reviews the Company’s activities since the last Board
meeting to ensure that Montanaro adheres to the agreed
Investment Policy and approved investment guidelines.
On an annual basis, Montanaro produces an AAF 01/06
Report on internal controls, which is reviewed by a firm
of independent reporting accountants, and which is
then reviewed and considered by the Audit Committee.
Montanaro is also the Company’s AIFM and in this
capacity provides a semi-annual report to the Board.
•
Juniper are responsible for the provision of company
secretarial, accounting and administration services to
the Company. On an annual basis, Juniper produce an
ISAE 3402 Report on internal controls, which is reviewed
by a firm of independent reporting accountants, for
consideration by the Audit Committee.
•
The Board reviews contracts with other third party service
providers, including the standard of services provided, on
a regular basis.
A formal annual review of these procedures is carried out by
the Audit Committee. The review meeting is attended by the
Company’s Auditor. During the year, the Committee received
updates on any material changes in the risk environment
and regulatory requirements, and the action taken. These
procedures have been in place throughout the year and up
to the date of approval of the Annual Report, and the Board is
satisfied with their effectiveness. The procedures are designed
to manage rather than eliminate risk and, by their nature, can
only provide reasonable, but not absolute, assurance against
material misstatement or loss.
The Board has previously reviewed the need for an internal
audit function. As an externally managed investment trust,
it has decided that the systems and procedures employed
by the Manager and the Administrator, including their risk
management and internal audit functions, provide assurance
that a sound system of internal control, which safeguards
shareholders’ investment and the Company’s assets, is
maintained. In addition, reporting is also provided by the
Depositary with respect to their monitoring and oversight
of the Company. An internal audit function, specific to the
Company, is therefore considered unnecessary.
EXTERNAL AUDIT PROCESS AND SIGNIFICANT MATTERS
CONSIDERED BY THE AUDIT COMMITTEE
As part of its review of the scope and results of the audit,
during the year the Audit Committee considered and approved
PwC’s plan for the audit of the financial statements for the
year ended 31March 2025. At the conclusion of the audit,
PwC did not highlight any issues to the Audit Committee which
would cause it to qualify its audit report nor did it highlight any
fundamental internal control weaknesses. PwC has issued an
unqualified audit report which is included on pages 43 to 49.
The significant issues considered by the Audit Committee are
discussed in the table below.
Significant Issues Considered by the Audit Committee in Relation to the Financial Statements
Matter Action
Investment Portfolio Valuation:
The Company’s portfolio is invested in
the shares of European quoted smaller
companies. Errors in the portfolio valuation
could have a material impact on the
Company’s NAV per share.
The Board reviews a full portfolio valuation at each Board meeting and, since
the implementation of the AIFM Directive in July 2014, receives semi-annual
reports from the AIFM and Depositary. The Audit Committee reviewed the
Administrator’s annual internal controls report, which is reported on by
independent external accountants, and which details the systems, processes
and controls around the daily pricing of securities, including the application of
exchange rate movements.
Misappropriation of Assets:
Misappropriation of the Company’s
investments or cash balances could have a
material impact on its NAV pershare.
The Audit Committee reviewed the Administrator’s annual internal control
report, as referred to above, which details the controls around the
reconciliation of the Administrator’s records to those of the Custodian. The
Audit Committee also reviewed the Custodian’s annual internal controls
report, which is reported on by independent external accountants, and which
provides details regarding its control environment. As stated above, since the
implementation of the AIFM Directive in July 2014, the Board receives semi-
annual reports from the AIFM and Depositary.
page 38 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
Report of the Audit Committee continued
Matter Action
Income Recognition:
Incomplete or inaccurate income recognition,
including allocation between revenue and
capital, could have an adverse effect on the
Company’s NAV and earnings per share and
its level of distributable revenue.
The Audit Committee reviewed the Administrator’s annual internal controls
report, as referred to above, which details the systems, processes and controls
around the recording of investment income. It also compared the final level
of income received for the year to the budget which was set at the start of the
year and considered the accounting treatment of all special dividends received
with the Manager.
Annual Report and Accounts:
Ensuring the Annual Report and Accounts is
fair, balanced and understandable.
The Audit Committee read and discussed this Annual Report and Accounts and
advised the Board that it is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Company’s position and
performance, business model and strategy.
NON-AUDIT SERVICES
The Committee regards the continued independence of the
Auditors to be a matter of the highest priority. The Company’s
policy with regard to the provision of non-audit services by
the external auditor ensures that no engagement will be
permittedif:
•
The provision of the services would contravene any
regulation or ethical standard;
•
The auditor is not considered to be an expert provider of
the non-audit services;
•
The provision of such services by the auditor creates a
conflict of interest for either the Board or the Manager;
and
•
The services are considered to be likely to inhibit the
auditors independence or objectivity as auditors.
AUDITOR ASSESSMENT, INDEPENDENCE AND APPOINTMENT
The Audit Committee reviews the re-appointment of the
auditor every year. As part of this year’s review of auditor
independence and effectiveness, PwC has confirmed that it is
independent of the Company and has complied with relevant
auditing standards. In evaluating PwC, the Audit Committee has
taken into consideration the standing, skills and experience of
the firm and the audit team. The Audit Committee, from direct
observation and enquiry of the Administrator, remains satisfied
that PwC continues to provide effective independent challenge
in carrying out its responsibilities. PwC’s fee in respect of the
audit for the year ended 31March 2025 is £57,750 (2024:
£54,340). The increase in fees reflects the cumulative effect of
inflationary pressures since the audit tender.
Following professional guidelines, the audit partner rotates
after five years. The year ended 31March 2025 is Shujaat
Khan’s fourth year as audit partner.
On the basis of their assessment, the Audit Committee has
recommended the re-appointment of PwC to the Board. PwC’s
performance will continue to be reviewed annually taking into
account all relevant guidance and best practice.
On behalf of the Board
C A ROXBURGH
Chair of the Audit Committee
18 June 2025
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 39
ANNUAL STATEMENT FROM THE CHAIR OF THE
REMUNERATION COMMITTEE (THE “COMMITTEE”)
I am pleased to present the Directors’ Remuneration Report
for the year ended 31March 2025.
During the year, the Committee reviewed the Remuneration
Policy and the Directors’ fees. The outcomes of each of these
reviews can be found below.
This report shows all major decisions on Directors’
remuneration and any substantial changes made during
the year relating to Directors’ remuneration, including the
context in which any changes occurred. Under company law,
the Auditor is required to audit certain disclosures provided.
Where disclosures have been audited they are indicated
as such. The Auditor’s opinion is included in its report on
pages43 to 49.
The Remuneration Committee consists solely of independent
non-executive Directors and determines the level of the
Directors’ fees in accordance with the AIC Code of Corporate
Governance. The Company Secretary provides information
on comparative levels of Directors’ fees to the Remuneration
Committee in advance of each review.
The members of the Remuneration Committee are Mr Curling,
Ms Roxburgh, Ms Williams and the Chair, Mr Neilly. As the
Company has no executive Directors, the Committee meets
annually to determine the level of Directors’ fees and to review
the performance of the Manager. The outcome of the review of
the Manager can be found on page 29. No Director is involved
in deciding their own remuneration outcome.
DIRECTORS’ REMUNERATION POLICY
The existing Directors’ Remuneration Policy was approved at
the Company’s Annual General Meeting in 2023.
The Company’s policy is to remunerate Directors exclusively
by fixed fees in cash at a rate which should reflect the
responsibilities of being a non-executive Director, including the
potential liabilities associated with the position, and the time
committed by them to these responsibilities including, where
appropriate, Board Committee duties. There were no changes
to the policy during the year.
The fees for the non-executive Directors are determined within
the limits set out in the Company’s Articles of Association. The
present limit is £200,000 in aggregate per annum and may not
be changed without seeking shareholder approval at a general
meeting. There is no performance related remuneration
scheme and therefore non-executive Directors are not eligible
for bonuses, pension benefits, share options, long-term
incentive schemes or other benefits. Directors do not have
service contracts, but new Directors are provided with a letter
of appointment. These letters of appointment are available for
inspection at the Company’s registered office. The terms of
Directors’ appointments provide that they should retire and be
subject to election at the next Annual General Meeting after
their appointment. Under the terms of the Company’s Articles
of Association, Directors are obliged to offer themselves for
re-election by shareholders by not later than the third Annual
General Meeting after they were last elected. However, the
Board has agreed that all Directors will retire annually and,
if appropriate, seek re-election. There is no notice period
and no provision for compensation upon early termination
ofappointment.
APPROACH TO RECRUITMENT REMUNERATION
The principle adopted by the Committee in respect of
recruitment of Directors is that the fees for a non-executive
Director should reflect the responsibilities and time
commitment required. The Committee seeks to encourage
the enhancement of the Company’s performance and to
ensure that remuneration packages offered are competitive
and designed to attract, retain and motivate Directors of the
rightcalibre.
Any new non-executive Director would be paid on the same
basis as the existing non-executive Directors. As noted above
the aggregate level of Directors’ fees must not exceed a set
limit, as set out in the Company’s Articles of Association, which
is currently £200,000 per annum.
Directors’ Remuneration Report
page 40 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
FUTURE POLICY TABLE
Following a review of the level of Directors’ fees, the Remuneration Committee concluded that, for the forthcoming financial year,
the Chairman’s fee will remain at £43,000 per annum, the Audit Committee Chair’s fee will remain at £37,500 per annum and
other Directors’ fees will remain at £31,000 per annum.
Based on these fees, Directors’ fees for the forthcoming financial year would be as follows:
31March 2026 31March 2025
Chairman £43,000 £43,000
Audit Committee Chair £37,500 £37,500
Director £31,000 £31,000
DIRECTORS’ EMOLUMENTS FOR THE YEAR (AUDITED)
The Directors who served during the financial year received the following amounts for services as non-executive Directors for the
years ended 31March 2025 and 31March 2024 as well as reimbursement for expenses necessarily incurred. No other forms of
remuneration were paid during the year.
Fees
£
Taxable
Benefits^
£
Total
£
Total fixed
remuneration
£
Total variable
remuneration
£
2025 2024 2025 2024 2025 2024 2025 2024 2025 2024
R M Curling 43,000 41,000 1,501 1,130 44,501 42,130 43,000 41,000 1,501 1,130
C A Roxburgh 37,500 35,500 4,442 1,445 41,942 36,945 37,500 35,500 4,442 1,445
G Neilly 31,000 29,500 – 455 31,000 29,955 31,000 29,500 – 455
H Williams 17,562 – 865 – 18,427 – 17,562 – 865 –
Total 129,062 106,000 6,808 3,030 135,870 109,030 129,062 106,000 6,808 3,030
^ Comprises amounts reimbursed for expenses incurred in carrying out business for the Company.
No sums are paid to any third parties in respect of Directors’ services and no sums were paid to any third parties in respect of
advice from remuneration advisors. There have been no payments to past Directors during the financial year ended 31March
2025, whether for loss of office or otherwise.
ANNUAL PERCENTAGE CHANGE IN REMUNERATION OF DIRECTORS
Directors’ pay has increased over the last five years, as set out in the table below:
2025
£
Change
%
2024
£
Change
%
2023
£
Change
%
2022
£
Change
%
2021
£
Change
%
2020
£
Chairman 43,000 4.9 41,000 5.1 39,000 8.2 36,050 3.0 35,000 9.0 32,000
Audit Committee Chair 37,500 5.6 35,500 6.0 33,500 8.4 30,900 3.0 30,000 11.0 27,000
Director 31,000 5.1 29,500 5.4 28,000 8.7 25,750 3.0 25,000 9.0 23,000
The Company does not have any employees and therefore no comparisons are given in respect of Directors’ and employees’ pay
increases.
Directors’ Remuneration Report continued
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 41
COMPANY PERFORMANCE
The Board is responsible for the Company’s investment
strategy and performance, although the management of the
Company’s investment portfolio is delegated to Montanaro
through the investment management agreement, as referred
to in the Report of the Directors on page 29. The graph
below compares, for the ten financial years ended 31March
2025, the share price total return (assuming all dividends are
reinvested) to shareholders compared to the return from the
benchmark index. An explanation of the performance of the
Company for the year ended 31March 2025 is given in the
Chairman’s Statement and the Manager’s Report.
Share Price and Benchmark Performance**
(rebasedat100 on 31March 2015, GBP)
400
35
0
30
0
25
0
20
0
15
0
10
0
50
2014 2015 2016 2017 2018 2019 20242023202220212020
Share Price Total Return
Benchmark Total Return
** From 5September 2006: MSCI Europe SmallCap Index. The benchmark
was changed on 1June 2009 to the MSCI Europe ex-UK SmallCap Index
(in Sterling terms). This benchmark was selected because it is the most
commonly used index for SmallCap investors.
VOTING AT AGM
At the Company’s last Annual General Meeting, held on
5September 2024, shareholders approved the Annual Report
on Directors’ Remuneration for the year ended 31March 2024,
99.65% of votes were in favour of the resolution and 0.35% of
voters were against. 0.1% of votes were withheld.
An ordinary resolution for the approval of this Annual Report
on Directors’ Remuneration will be put to shareholders at the
forthcoming Annual General Meeting.
The Directors’ Remuneration Policy was last approved by
shareholders at the Company’s Annual General Meeting, held
on 7 September 2023. 99.25% of votes were in favour of the
resolution and 0.73% of votes were against. 0.02% of votes
were withheld.
RELATIVE IMPORTANCE OF DIRECTORS’ FEES
As the Company has no employees, the table above
represents the total remuneration costs and benefits paid by
the Company. To enable shareholders to assess the relative
importance of expenditure on Directors’ remuneration, the
table below shows the actual expenditure during the year in
relation to Directors’ remuneration (excluding taxable benefits),
other operating expenses and shareholder distributions:
2025
£
2024
£
Change
%
Aggregate Directors’
remuneration 129,062 106,000 21.8
†
Management and other
operating expenses* 3,234,000 2,982,000 8.5
Dividends paid to
shareholders 2,273,000 1,885,000 20.6
* Includes Directors’ remuneration.
†
This represents the total change; the Board comprised four Directors from
6 September 2024, compared to three Directors during the year ending
31March 2024
DIRECTORS’ INTERESTS (AUDITED)
The Directors who held office during the year and their
interests in the shares of the Company were as follows:
As at
31March 2025
No. of shares
As at
31March 2024
No. of shares
R M Curling Beneficial 150,000 150,000
C A Roxburgh^ Beneficial 70,169 62,833
G Neilly Beneficial 62,701 62,293
H Williams – – –
^ Includes 1,654 shares held in Ms Roxburgh’s spouse’s name
On 7 May 2025, Hillary Williams acquired 6,255 Ordinary
shares. There have been no other changes to the above
holdings between 31 March 2025 and the date of this Annual
Report. None of the Directors nor any persons connected
with them had a material interest in any of the Company’s
transactions, arrangements or agreements during the year.
STATEMENT OF IMPLEMENTATION OF REMUNERATION POLICY
IN RESPECT OF THE FINANCIAL YEAR ENDING 31MARCH 2026
The Committee will, as usual, review Directors’ fees during
2025/26, including the time required to be committed to
the business of the Company, and will consider whether any
further changes to remuneration are required.
By Order of the Board
G NEILLY
Chair of the Remuneration Committee
18 June 2025
page 42 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law
and regulation.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the Directors
have prepared the financial statements in accordance with UK-
adopted international accounting standards.
Under company law, Directors must not approve the financial
statements unless they are satisfied that they give a true and
fair view of the state of affairs of the Company and of the
profit or loss of the Company for that period. In preparing the
financial statements, the Directors are required to:
•
select suitable accounting policies and then apply
themconsistently;
•
state whether applicable UK-adopted international
accounting standards have been followed, subject to
any material departures disclosed and explained in the
financial statements;
•
make judgements and accounting estimates that are
reasonable and prudent; and
•
prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Company will continue in business.
The Directors are responsible for safeguarding the assets of
the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are also responsible for keeping adequate
accounting records that are sufficient to show and explain the
Company’s transactions and disclose with reasonable accuracy
at any time the financial position of the Company and enable
them to ensure that the financial statements and the Directors’
Remuneration Report comply with the Companies Act 2006.
The Directors are responsible for the maintenance and
integrity of the Company’s website. Legislation in the United
Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in
otherjurisdictions.
DIRECTORS’ CONFIRMATIONS
Each of the Directors, whose names and functions are listed in
Board of Directors confirm that, to the best of their knowledge:
•
the financial statements, which have been prepared in
accordance with UK-adopted international accounting
standards, give a true and fair view of the assets, liabilities,
financial position and return of the Company; and
•
the Strategic Report includes a fair review of the
development and performance of the business and the
position of the Company, together with a description of
the principal risks and uncertainties that it faces.
R M CURLING
Chairman
18 June 2025
Statement of Directors’ Responsibilities
in respect of the Financial Statements
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 43
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
OPINION
In our opinion, Montanaro European Smaller Companies Trust plc’s financial statements:
•
give a true and fair view of the state of the Company’s affairs as at 31 March 2025 and of its return and cash flows for the
year then ended;
•
have been properly prepared in accordance with UK-adopted international accounting standards; and
•
have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual Report and Accounts (the “Annual Report”), which comprise:
the Balance Sheet as at 31 March 2025; the Statement of Comprehensive Income, the Statement of Changes in Equity and the
Statement of Cash Flows for the year then ended; and the notes to the financial statements, comprising material accounting
policy information and other explanatory information.
Our opinion is consistent with our reporting to the Audit Committee.
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.
Ourresponsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements
section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
ouropinion.
Independence
We remained independent of the Company in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we
have fulfilled our other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not
provided.
We have provided no non-audit services to the Company in the period under audit.
OUR AUDIT APPROACH
Context
Montanaro European Smaller Companies Trust plc is an Investment Trust Company listed on the London Stock Exchange and
invests primarily in equities quoted on European investment markets. The operations of the Company are located in the UK.
Wefocus our audit work primarily on the valuation and existence of investments and income from investments.
Overview
Audit scope
•
The Company is a standalone Investment Trust Company and engages Montanaro Asset Management Limited
(the“Manager”) to manage its assets.
•
We conducted our audit of the financial statements using information from Juniper Partners Limited, (the “Administrator”)
towhom the Board has, delegated the provision of certain administrative functions.
•
We tailored the scope of our audit taking into account the types of investments within the Company, the involvement of the
third parties referred to above, the accounting processes and controls, and the industry in which the Company operates.
•
We obtained an understanding of the control environment in place at both the Manager and the Administrator and adopted
a fully substantive testing approach using reports obtained from the Administrator.
Independent Auditors’ Report
to the Members of Montanaro European Smaller Companies Trust plc
page 44 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
Key audit matters
•
Valuation and existence of investments
•
Income from and gains/losses on investments
Materiality
•
Overall materiality: £2,915,080 (2024: £3,127,200) based on 1% of Net Assets.
•
Performance materiality: £2,186,310 (2024: £2,345,400).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial
statements. In particular, we looked at where the directors made subjective judgements, for example in respect of significant
accounting estimates that involved making assumptions and considering future events that are inherently uncertain.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement (whether
or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the
allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we
make on the results of our procedures thereon, were addressed in the context of our audit of the financial statements as a
whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
The key audit matters below are consistent with last year.
Key audit matter How our audit addressed the key audit matter
Valuation and existence of investments
Refer to the Material Accounting Policies and
the Notes to the financial statements.
The Investment portfolio at the year-end
comprised listed equity investments valued at
£296.8 million.
We focused on the valuation and existence of
investments because investments represent
the principal element of the net asset value as
disclosed in the Balance Sheet in the financial
statements.
We assessed the accounting policy for the valuation of investments for
compliance with accounting standards and performed testing to check that
investments are accounted for in accordance with this stated accounting policy.
We tested the valuation of the listed equity investments by agreeing the prices
used in the valuation to independent third party sources for all investments.
We tested the existence of the investment portfolio by agreeing investment
holdings to an independent custodian confirmation.
No material issues were identified.
Independent Auditors’ Report continued
to the Members of Montanaro European Smaller Companies Trust plc
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 45
Key audit matter How our audit addressed the key audit matter
Income from and gains/losses on
investments
Refer to Material Accounting policies and
Notes to the Financial Statements.
For the Company we consider that ‘income
’refers to both revenue and capital (including
gains and losses on investments).
We focused on the accuracy, occurrence
and completeness of investment income
as incomplete or inaccurate income could
have a material impact on the company’s net
assetvalue.
We also focused on the accounting policy
for income recognition and its presentation
in the Statement of Comprehensive
Income as set out in the requirements of
The Association of Investment Companies
Statement of Recommended Practice
(the “AIC SORP”) as incorrect application
could result in a misstatement in
incomerecognition.
We found that the accounting policies implemented were in accordance with
accounting standards and the AIC SORP, and that income has been accounted
forin accordance with the stated accounting policy.
The gains/losses on investments held at fair value through profit or loss
comprise realised and unrealised gains/losses. For unrealised gains and losses,
we tested the valuation of the portfolio at the year-end, together with testing
the reconciliation of opening and closing investments. For realised gains/
losses, we tested a sample of disposal proceeds by agreeing the proceeds to
bank statements and we re-performed the calculation of a sample of realised
gains/losses. We also tested a sample of purchases to underlying supporting
documentation.
We tested the accuracy of dividend receipts by agreeing the dividend rates from
investment reports to independent third-party data.
To test for occurrence, we confirmed that all dividends recorded had occurred
in the market to independent third-party data, and traced a sample of cash
payments to bank statements.
To test for completeness, we tested that the appropriate dividends had been
received in the year by reference to independent third party data of dividends
declared for all listed investments during the year.
We also tested the allocation and presentation of income between the revenue
and capital return columns of the Statement of Comprehensive Income inline
with the requirements set out in the AIC SORP by assessing the treatment
applied in the context of the underlying facts and circumstances of a sample of
specialdividends.
No material issues were identified.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the Company, the accounting processes and controls, and the
industry in which it operates.
All audit procedures were conducted by a UK audit team. We tested and examined information using sampling and other
auditing techniques, to the extent we considered necessary to provide a reasonable basis for us to form our own judgements.
The impact of climate risk on our audit
As part of our audit we made enquiries of management to understand the extent of the potential impact of climate risk on the
Company’s financial statements, and we remained alert when performing our audit procedures for any indicators of the impact of
climate risk. Our procedures did not identify any material impact as a result of climate risk on the Company’s financial statements.
page 46 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
Independent Auditors’ Report continued
to the Members of Montanaro European Smaller Companies Trust plc
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and
extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of
misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall company materiality £2,915,080 (2024: £3,127,200).
How we determined it 1% of Net Assets
Rationale for benchmark applied We believe that net assets is the primary measure used by the shareholders in
assessing the performance of the entity, and is a generally accepted auditing
benchmark. This benchmark provides an appropriate and consistent year on
year basis for our audit.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and
undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope
of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example
in determining sample sizes. Our performance materiality was 75% (2024: 75%) of overall materiality, amounting to £2,186,310
(2024: £2,345,400) for the company financial statements.
In determining the performance materiality, we considered a number of factors – the history of misstatements, risk assessment
and aggregation risk and the effectiveness of controls – and concluded that an amount at the upper end of our normal range was
appropriate.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £145,754
(2024: £156,360) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
CONCLUSIONS RELATING TO GOING CONCERN
Our evaluation of the Directors’ assessment of the Company’s ability to continue to adopt the going concern basis of
accountingincluded:
•
evaluating the Directors’ risk assessment and considering whether it addressed the relevant threats to the Company;
•
evaluating the Directors’ assessment of potential operational impacts to the Company of relevant risks, considering their
consistency with other available information and our understanding of the business and assessed the potential impact on
the financial statements;
•
reviewing the Directors’ assessment of the Company’s financial position in the context of its ability to meet future expected
operating expenses, their assessment of liquidity as well as their review of the operational resilience of the Company and
oversight of key third-party service providers; and
•
assessing the implication of potential significant reductions in NAV as a result of market movements on the ongoing ability of
the Company to operate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Company’s ability to continue as a going concern for a period of at
least twelve months from when the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the Company’s
ability to continue as a going concern.
From our work on the corporate governance statement described below, we have nothing material to add or draw attention to
in relation to the Directors’ statement in the financial statements about whether the Directors considered it appropriate to adopt
the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections
of this report.
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 47
REPORTING ON OTHER INFORMATION
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’
report thereon. The Directors are responsible for the other information. Our opinion on the financial statements does not cover
the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in
this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained
in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material
misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial
statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based
on these responsibilities.
With respect to the Strategic Report and Directors’ Report, we also considered whether the disclosures required by the
UKCompanies Act 2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions
and matters as described below.
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and
Directors’ Report for the year ended 31 March 2025 is consistent with the financial statements and has been prepared in
accordance with applicable legal requirements.
In light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we did not
identify any material misstatements in the Strategic report and Directors’ Report.
Directors’ Remuneration
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with
theCompanies Act 2006.
CORPORATE GOVERNANCE STATEMENT
As explained in Corporate Governance Statement, the Directors have chosen to demonstrate how the Company has met its
obligations under the UK Corporate Governance Code (“the Code”) by reporting under the 2019 Association of Investment
Companies’ Code of Corporate Governance (“the AIC Code”). As such, we refer to the AIC Code where we report matters required
under ISAs (UK) in respect of the Directors’ statements in relation to going concern, longer-term viability and that part of the
corporate governance statement relating to the Company’s compliance with the provisions of the Code specified by the Listing
Rules for our review. Our additional responsibilities with respect to the corporate governance statement as other information are
described in the Reporting on other information section of this report.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate
governance statement is materially consistent with the financial statements and our knowledge obtained during the audit, and we
have nothing material to add or draw attention to in relation to:
•
The Directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;
•
The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging
risks and an explanation of how these are being managed or mitigated;
•
The Directors’ statement in the financial statements about whether they considered it appropriate to adopt the going
concern basis of accounting in preparing them, and their identification of any material uncertainties to the Company’s ability
to continue to do so over a period of at least twelve months from the date of approval of the financial statements;
•
The Directors’ explanation as to their assessment of the Company’s prospects, the period this assessment covers and why
the period is appropriate; and
•
The Directors’ statement as to whether they have a reasonable expectation that the Company will be able to continue in
operation and meet its liabilities as they fall due over the period of its assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
page 48 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
Independent Auditors’ Report continued
to the Members of Montanaro European Smaller Companies Trust plc
Our review of the Directors’ statement regarding the longer-term viability of the Company was substantially less in scope than an
audit and only consisted of making inquiries and considering the Directors’ process supporting their statement; checking that the
statement is in alignment with the relevant provisions of the Code; and considering whether the statement is consistent with the
financial statements and our knowledge and understanding of the Company and its environment obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the
corporate governance statement is materially consistent with the financial statements and our knowledge obtained during the audit:
•
The Directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable,
and provides the information necessary for the members to assess the Company’s position, performance, business model
andstrategy;
•
The section of the Annual Report that describes the review of effectiveness of risk management and internal control
systems; and
•
The section of the Annual Report describing the work of the Audit Committee.
We have nothing to report in respect of our responsibility to report when the Directors’ statement relating to the Company’s
compliance with the Code does not properly disclose a departure from a relevant provision of the Code specified under the
Listing Rules for review by the auditors.
RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS AND THE AUDIT
Responsibilities of the Directors for the financial statements
As explained more fully in the Statement of Directors’ Responsibilities, the Directors are responsible for the preparation of the
financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view.
TheDirectors are also responsible for such internal control as they determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financialstatements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the Company and industry, we identified that the principal risks of non-compliance with laws
and regulations related to to breaches of section 1158 of the Corporation Tax Act 2010, and we considered the extent to
which non-compliance might have a material effect on the financial statements. We evaluated management’s incentives and
opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined
that the principal risks were related to posting inappropriate journal entries to increase revenue (investment income and capital
gains) or to increase net asset value of the Company. Audit procedures performed by the engagement team included:
•
discussions with the Manager and Audit Committee, including consideration of known or suspected instances of
noncompliance with laws and regulation and fraud;
•
reviewing relevant committee meeting minutes, including those of the Board and Audit Committee;
•
assessment of the Company’s compliance with the requirements of section 1158 of the Corporation Tax Act 2010, including
recalculation of numerical aspects of the eligibility conditions;
•
review of financial statement disclosures to underlying supporting documentation;
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 49
•
identifying and testing manual journal entries posted by the Administrator during the preparation of the financial
statements; and
•
designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of
non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial
statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one
resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations,
orthrough collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing
techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete populations.
We will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we will use audit
sampling to enable us to draw a conclusion about the population from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with
Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume
responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
OTHER REQUIRED REPORTING
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
•
we have not obtained all the information and explanations we require for our audit; or
•
adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been
received from branches not visited by us; or
•
certain disclosures of Directors’ remuneration specified by law are not made; or
•
the financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the
accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Audit Committee, we were appointed by the members on 9 September 2021 to audit
the financial statements for the year ended 31 March 2022 and subsequent financial periods. The period of total uninterrupted
engagement is four years, covering the years ended 31 March 2022 to 31 March 2025.
SHUJAAT KHAN (Senior statutory auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Edinburgh
18 June 2025
page 50 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
Year to 31March 2025 Year to 31March 2024
Notes
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Capital (losses)/gains on investments
(Losses)/gains on investments held at fair value 9 – (5,074) (5,074) – 13,543 13,543
Exchange (losses)/gains – (52) (52) – 135 135
Revenue
Investment income 2 5,098 – 5,098 4,576 – 4,576
Other income 2 84 – 84 116 – 116
Total income 5,182 (5,126) 56 4,692 13,678 18,370
Expenditure
Management expenses 3 (865) (1,608) (2,473) (803) (1,490) (2,293)
Other expenses 4 (761) – (761) (689) – (689)
Total expenditure (1,626) (1,608) (3,234) (1,492) (1,490) (2,982)
Return before finance costs and taxation 3,556 (6,734) (3,178) 3,200 12,188 15,388
Finance costs 5 (183) (340) (523) (134) (248) (382)
Return before taxation 3,373 (7,074) (3,701) 3,066 11,940 15,006
Taxation 6 (536) – (536) (376) – (376)
Return after taxation 2,837 (7,074) (4,237) 2,690 11,940 14,630
Return per share 8 1.50p (3.75p) (2.25p) 1.42p 6.30p 7.72p
The total column of this statement represents the Company’s Income Statement and Statement of Comprehensive Income,
prepared to UK-adopted International Accounting Standards in conformity with the Companies Act 2006.
The supplementary revenue return and capital return columns are both prepared under guidance published by the Association
of Investment Companies.
All revenue and capital items in the above statement derive from continuing operations.
No operations were acquired or discontinued in the year.
The accompanying notes are an integral part of the financial statements.
Statement of Comprehensive Income
for the year ended 31 March 2025
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 51
31March 2025 31March 2024
Notes £’000 £’000
Non-current assets
Investments held at fair value through profit or loss 9 296,829 321,676
Current assets
Trade and other receivables 10 1,592 885
Cash and cash equivalents 10 14,816 242
16,408 1,127
Total assets 313,237 322,803
Current liabilities
Trade and other payables 11 (839) (754)
Revolving credit facility 11 (12,560) (856)
(13,399) (1,610)
Non-current liabilities
Interest-bearing bank loan 12 (8,330) (8,473)
Total liabilities (21,729) (10,083)
Net assets 291,508 312,720
Capital and reserves
Ordinary share capital 13 9,471 9,471
Share premium account 44,057 44,057
Capital redemption reserve 2,212 2,212
Capital reserve 230,745 252,521
Revenue reserve 5,023 4,459
Total shareholders’ funds 291,508 312,720
Net asset value per share 14 162.0p 165.1p
The financial statements on pages 50 to 66 were approved and authorised for issue by the Board of Directors on 18June 2025
and signed on its behalf by:
R CURLING
Director
Company Registered Number: SC074677
The accompanying notes are an integral part of the financial statements.
Balance Sheet
as at 31 March 2025
page 52 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
Year to 31March 2025 Notes
Share
capital
£’000
Share
premium
account
£’000
Capital
redemption
reserve
£’000
Capital
reserve
£’000*
Revenue
reserve
£’000*
Total
£’000
As at 1 April 2024 9,471 44,057 2,212 252,521 4,459 312,720
Return after taxation – – – (7,074) 2,837 (4,237)
Dividends paid 7 – – – – (2,273) (2,273)
Share buybacks 13 – – – (14,702) – (14,702)
As at 31 March 2025 9,471 44,057 2,212 230,745 5,023 291,508
Year to 31March 2024 Notes
Share
capital
£’000
Share
premium
account
£’000
Capital
redemption
reserve
£’000
Capital
reserve
£’000*
Revenue
reserve
£’000*
Total
£’000
As at 1 April 2023 9,471 44,057 2,212 240,581 3,654 299,975
Return after taxation – – – 11,940 2,690 14,630
Dividends paid 7 – – – – (1,885) (1,885)
As at 31 March 2024 9,471 44,057 2,212 252,521 4,459 312,720
The accompanying notes are an integral part of the financial statements.
* These reserves are distributable. However the amount that is distributable is not necessarily the full amount of the reserves as disclosed in these financialstatements.
Statement of Changes in Equity
for the year ended 31 March 2025
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 53
31March 2025
£’000
31March 2024
£’000
Cash flows from operating activities
Return before taxation (3,701) 15,006
Investment losses/(gains) 5,074 (13,543)
Exchange losses/(gains) 52 (135)
Finance costs 523 381
Withholding tax (557) (374)
Investment income (5,182) (4,692)
Dividends received 5,208 4,675
Other income received 84 116
Purchases of investments (22,379) (33,701)
Sales of investments 41,415 35,136
Increase in receivables (62) (100)
Increase in payables 51 222
Net cash inflow from operating activities 20,526 2,991
Cash flows from financing activities
Own shares bought back (14,702) –
Repayments of loan – (4,327)
Drawdowns on revolving credit facility 11,683 855
Loan arrangement fees – (94)
Dividends paid (2,273) (1,885)
Interest paid (452) (353)
Net cash outflow from financing activities (5,744) (5,804)
Net increase/(decrease) in cash and cash equivalents 14,782 (2,813)
Exchange losses (208) (170)
Increase/(decrease) in cash and cash equivalents 14,574 (2,983)
Cash and cash equivalents at beginning of year 242 3,225
Cash and cash equivalents at end of year 14,816 242
The accompanying notes are an integral part of the financial statements.
Statement of Cash Flows
for the year ended 31 March 2025
page 54 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
Notes to the Financial Statements
for the year ended 31 March 2025
1 Material Accounting Policies
A summary of the principal accounting policies is set out below.
BASIS OF ACCOUNTING
The financial statements of the Company have been prepared in accordance with International Accounting Standards in conformity
with the requirements of the UK-adopted International Accounting Standards and with the requirements of the Companies Act 2006
as applicable to companies reporting under those standards. The annual financial statements have been prepared in accordance
with the Statement of Recommended Practice issued by the Association of Investment Companies (“AIC SORP”) for the financial
statements of investment trust and venture capital trusts, except to any extent where it is not consistent with the requirements of
International Accounting Standards in conformity with the Companies Act 2006.
The functional and presentational currency of the Company is Pounds Sterling and has been determined on the basis of the
currency of the Company’s share capital and the currency in which dividends and expenses are paid.
The financial statements have been prepared on a going concern basis, under historical cost convention, except for the
measurement at fair value of investments measured at fair value through profit or loss and on the expectation that approval as
an investment trust company will continue to be met.
The financial statements have adopted the following accounting policies in their preparation, which remain consistent with the
accounting policies adopted in the audited financial statements for the year ended 31March 2024. All values are rounded to the
nearest thousand pounds unless otherwise indicated.
The Directors have made an assessment of the Company’s ability to continue as a going concern and are satisfied that the
Company has adequate resources to continue in business for the foreseeable future, being until at least 18June 2026. Please
refer to page 30 for full details of the Directors’ going concern assessment.
ACCOUNTING DEVELOPMENTS
Certain new accounting standards, amendments to accounting standards and interpretations have been published that are
not mandatory for 31March 2025 reporting periods and have not been early adopted by the Company. These standards,
amendments or interpretations are not expected to have a material impact on the entity in the current or future reporting
periods and on foreseeable future transactions. The Company has yet to assess the full impact of IFRS 18-Presentation and
Disclosure in Financial Statements which is effective from 1 January 2027.
CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
The preparation of financial statements in accordance with International Accounting Standards in conformity with the Companies
Act 2006, requires management to make judgements, estimates and assumptions that affect the application of policies and the
reported amounts in the Balance Sheet, the Statement of Comprehensive Income and the disclosure of contingent assets and
liabilities at the date of the financial statements. The estimates and associated assumptions are based on historical experience
and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of
making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results
may differ from these estimates.
The areas requiring the most significant judgement in the preparation of the financial statements are: recognising and classifying
unusual or special dividends received as either revenue or capital in nature; and setting the levels of dividends paid and
proposed in satisfaction of both the Company’s long-term objective and its obligations to adhere to investment trust status rules
under Section 1158 of the Corporation Tax Act 2010.
Dividends received which appear to be unusual in size or circumstance are assessed on a case-by-case basis, based on
interpretation of the investee companies’ relevant statements, to determine their allocation in accordance with the AIC SORP to
either the revenue account or capital reserves. Dividends which have clearly arisen out of the investee company’s reconstruction or
reorganisation are usually considered to be capital in nature and allocated to capital reserves. Investee company dividends which
appear to be paid in excess of current year profits will still be considered as revenue in nature unless evidence suggests otherwise.
The estimates and underlying assumptions are reviewed on an ongoing basis. Any revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision
and future period if the revision affects both current and future periods.
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 55
1 Material Accounting Policies continued
SEGMENTAL REPORTING
The Board is of the view that the Company is engaged in a single segment of business, of investing in European quoted smaller
companies, and that therefore the Company has only a single operating segment.
PRESENTATION OF STATEMENT OF COMPREHENSIVE INCOME
In order to better reflect the activities of an investment trust company and in accordance with guidance issued by the AIC,
supplementary information which analyses the Statement of Comprehensive Income between items of a revenue and capital
nature has been presented alongside the Statement of Comprehensive Income. The net revenue return is the measure the
Directors believe appropriate in assessing the Company’s compliance with certain requirements set out in Section 1158 of the
Corporation Tax Act 2010.
INCOME
Dividends are recognised as income on the date that the related investments are marked ex-dividend.
Dividends receivable on equity shares where no ex-dividend date is quoted are recognised when the Company’s right to receive
payment is established.
Special dividends are taken to the revenue or capital account depending on their nature. In deciding whether a dividend should
be regarded as a capital or revenue receipt, the Board reviews all relevant information as to the reasons for the sources of the
dividend on a case-by-case basis.
Where the Company has elected to receive its dividends in the form of additional shares rather than cash, the amount of the
cash dividend foregone is recognised as income.
All other income is accounted for on a time apportioned basis.
EXPENSES AND FINANCE COSTS
All expenses and finance costs are accounted for on an accruals basis and are charged against revenue, except where incurred
in connection with the maintenance or enhancement of the value of the Company’s assets and taking account of the expected
long-term returns as follows:
– finance costs payable are allocated 35% to revenue and 65% to capital.
– investment management fees payable are allocated 35% to revenue and 65% to capital.
TAXATION
The tax expense represents the sum of the tax currently payable and movements in deferred tax. Tax payable is based on the
taxable profit for the year and withholding tax payable. Taxable profit differs from profit before tax as reported in the Statement
of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in other years and it
further excludes items that are never taxable or deductible. The Company’s liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the Balance Sheet date.
In line with the recommendations of the AIC SORP, the allocation method used to calculate tax relief on expenses presented
against capital returns in the supplementary information in the Statement of Comprehensive Income is the ‘marginal basis’.
Under this basis, if taxable income is capable of being offset entirely by expenses presented in the revenue return column of the
Statement of Comprehensive Income, then no tax relief is transferred to the capital return column.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted
for using the Balance Sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible
temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each Balance Sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
page 56 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
Notes to the Financial Statements continued
1 Material Accounting Policies continued
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is
realised. Deferred tax is charged or credited in the Statement of Comprehensive Income, except when it relates to items charged
or credited directly to equity, in which case the deferred tax is also dealt with in equity.
Investment trusts which have approval under Section 1158 of the Corporation Tax Act 2010 are not liable to taxation on capital gains.
INVESTMENTS
The Company’s business is investing in financial assets with a view to profiting from their total return in the form of income and
capital growth. This portfolio of financial assets is managed and its performance evaluated on a fair value basis in accordance with
the documented investment strategy and information is provided internally on that basis to the Company’s Board of Directors
and other key management personnel.
The investments held by the Company are designated by the Company as ‘at fair value through profit or loss’.
All gains and losses are allocated to the capital return within the Statement of Comprehensive Income as ‘Gains or losses on
investments held at fair value through profit or loss’. Also included within this heading are transaction costs in relation to the
purchase or sale of investments. When a sale or purchase is made under a contract, the terms of which require delivery within
the timeframe of the relevant market, the investments concerned are recognised or derecognised on the trade date.
All investments are classified upon initial recognition as held at fair value through profit or loss, and are measured at subsequent
reporting dates at fair value, which is the bid price or the last traded price depending on the convention of the exchange on
which the investment is listed. The Company derecognises a financial asset only when the contractual rights to the cash flows
from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the
asset to another entity. On derecognition of a financial asset, the difference between the asset’s carrying amount and the sum of
consideration received and receivable and the cumulative gain or loss that had been accumulated is recognised in profit or loss.
All investments for which a fair value is measured or disclosed in the financial statements are categorised within the fair value
hierarchy levels set out in Note 15.
CASH AND CASH EQUIVALENTS
Cash comprises bank balances and cash held by the Company. Cash equivalents are short-term, highly liquid investments that
are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
LOANS
The loans are valued at amortised cost. Costs in relation to arranging the debt finance have been capitalised and are amortised
over the term of the finance. Hence, amortised cost is the par value less the amortised cost of issue.
The Euro loan is shown at amortised cost with the exchange difference on the principal amounts to be repaid reflected. Any gains
or losses arising from changes in exchange rate between Euro and Sterling is included in the Capital Reserve and shown in the
capital column of the Statement of Comprehensive Income.
RESERVES
Share Premium Account
The following are included in this reserve:
•
premium on the issue of shares.
•
surplus arising on the sale of Ordinary shares from Treasury.
•
costs associated with the issue of equity.
This reserve is non-distributable.
Capital Redemption Reserve
The nominal value of Ordinary shares bought back for cancellation is added to this reserve. This reserve is non-distributable.
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 57
1 Material Accounting Policies continued
Capital Reserve
The following are included in this reserve:
•
gains and losses on the realisation of investments.
•
increases and decreases in the valuation of investments held at the year end.
•
exchange differences of a capital nature.
•
special dividends of a capital nature.
•
expenses and finance costs, together with the related taxation effect, charged in accordance with the above policies.
•
cost of purchasing Ordinary shares to be held in Treasury or cancelled.
•
proceeds from the issue of Ordinary shares held in Treasury equivalent to the weighted average cost of the repurchase.
In addition, the Company’s Articles of Association permit it to distribute from the Capital Reserve any surplus arising from the
realisation of its investments.
Revenue Reserve
The net profit arising in the revenue column of the Statement of Comprehensive Income is added to this reserve. Dividends paid
during the year may be deducted from this reserve.
FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are recognised on the Balance Sheet of the Company when the Company becomes a party
to the contractual provisions of the instrument. The Company shall offset financial assets and financial liabilities if it has a legally
enforceable right to set off the recognised amounts and intends to settle on a net basis. As at 31March 2025, no financial assets
or financial liabilities had been offset (31March 2024: nil).
FOREIGN CURRENCIES
Monetary assets and liabilities expressed in foreign currencies are translated into Sterling at rates of exchange ruling at the
Balance Sheet date. Non-monetary items expressed in foreign currencies held at fair value are translated into Sterling at rates
of exchange ruling at the date the fair value is measured. Transactions in foreign currencies are converted to Sterling at the rate
ruling at the date of the transaction. Exchange gains and losses are taken to the Statement of Comprehensive Income as a capital
or revenue item depending on the nature of the underlying item.
Exchange gains and losses on investments are included within ‘Gains/(losses) on investments held at fair value’ and are taken
to the Capital Reserve. Exchange differences on other financial instruments are included in the Statement of Comprehensive
Income as ‘Exchange (losses)/gains’.
Rates of exchange (per Pound Sterling)
31March
2025
31March
2024
Change
%
Danish Krone 8.90 8.72 2.1%
Euro 1.19 1.17 1.7%
Norwegian Krone 13.56 13.65 (0.7%)
Swedish Krona 12.96 13.44 (3.6%)
Swiss Franc 1.14 1.14 0.0%
page 58 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
Notes to the Financial Statements continued
2 Income
Year to
31March 2025
£’000
Year to
31March 2024
£’000
Investment income
Overseas dividend income 5,102 4,582
Exchange losses (4) (6)
Investment income 5,098 4,576
Bank interest 84 100
Other income – 16
Total other income 84 116
Total income 5,182 4,692
3 Management Expenses
Year to 31March 2025 Year to 31March 2024
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Investment management fee 856 1,592 2,448 785 1,458 2,243
AIFM fee 9 16 25 18 32 50
865 1,608 2,473 803 1,490 2,293
Details of the management fee arrangements during the year, and future arrangements, are contained within the Directors’
Report on page 29 and details of fees owed to the Manager at the Balance Sheet date are included in Note 11.
4 Other Expenses
Year to 31March 2025 Year to 31March 2024
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Directors’ fees
129 – 129
106 – 106
Auditor’s remuneration for:
– statutory audit* 58 – 58 54 – 54
Secretarial and administration fees 188 – 188 173 – 173
Legal, professional and advisory fees – – – 13 – 13
Custody and depositary fees 115 – 115 96 – 96
Credit facility commitment fee 58 – 58 43 – 43
Other 213 – 213 204 – 204
761 – 761
689 – 689
* The statutory audit for the year to 31 March 2025 is £57,750 (2024: £54,340).
5 Finance Costs
Year to 31March 2025 Year to 31March 2024
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Interest payable on bank borrowings 183 340 523 134 248 382
6 Taxation
Year to 31March 2025 Year to 31March 2024
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Overseas tax 536 – 536 376 – 376
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 59
6 Taxation continued
FACTORS AFFECTING TAX CHARGE FOR THE YEAR
The corporation tax rate was 25% (2024: 25%). The tax charge for the year differs from the charge resulting from applying the
standard rate of corporation tax in the UK for an investment trust company. The differences are explained below:
Year to
31March 2025
£’000
Year to
31March 2024
£’000
(Loss)/profit on activities before taxation (3,701) 15,006
Corporation tax at standard rate of 25% (2024: 25%) (925) 3,752
Effect of:
Non-taxable losses/(gains) on investments 1,269 (3,386)
Movement in unutilised expenses 939 841
Non-taxable overseas income (1,296) (1,173)
Exchange losses/(gains) 13 (34)
Overseas tax 536 376
Total tax charge for the year 536 376
As at 31March 2025, the Company had unutilised management expenses for taxation purposes of £38,076,000 (2024:
£34,320,000). A deferred tax asset of £9,519,000 (2024: £8,580,000) has not been recognised on the unutilised expenses as it is
unlikely that there will be suitable taxable profits from which the future reversal of the deferred tax could be deducted.
7 Dividends
Year to
31March 2025
£’000
Year to
31March 2024
£’000
Final dividend for the year ended 31March 2023 of 0.725p per share – 1,459
Interim dividend for the year ended 31March 2024 of 0.225p per share – 426
Final dividend for the year ended 31March 2024 of 0.900p per share 1,705 –
First interim dividend for the year ended 31March 2025 of 0.300p per share 568 –
2,273 1,885
Amounts relating to the year but not paid at the year end:
Final dividend for the year ended 31March 2024 of 0.900p per share – 1,705
Second interim dividend for the year ended 31March 2025 of 0.960p per share 1,535 –
1,535 1,705
A second interim dividend of 0.96p will be paid on 7 August 2025 to shareholders on the register on 27 June 2025.
The attributable revenue and the dividends paid and proposed for the purposes of the income retention test for Section 1158 of
the Corporation Tax Act 2010, are set out below:
Year to
31March 2025
£’000
Year to
31March 2024
£’000
Revenue attributable to equity shareholders 2,837 2,690
Interim dividend for the year ended 31March 2024 of 0.225p per share – (426)
Final dividend for the year ended 31March 2024 of 0.900p per share – (1,705)
First interim dividend for the year ended 31March 2025 of 0.300p per share (568) –
Second interim dividend for the year ended 31March 2025 of 0.96p per share (1,535) –
Net movement in revenue 734 559
page 60 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
Notes to the Financial Statements continued
8 Return per Share
Year to 31March 2025 Year to 31March 2024
Revenue Capital Total Revenue Capital Total
Basic 1.50p (3.75p) (2.25p) 1.42p 6.30p 7.72p
Basic total return per Ordinary share is based on the total comprehensive loss for the financial year of £4,237,000 (2024: gain of
£14,630,000) and on 188,678,279 (2024: 189,427,600) Ordinary shares, being the weighted average number of Ordinary shares
in issue during the year.
Basic revenue return per Ordinary share is based on the net revenue return on ordinary activities after taxation of £2,837,000
(2024: £2,690,000), and on 188,678,279 (2024: 189,427,600) Ordinary shares, being the weighted average number of Ordinary
shares in issue during the year.
Basic capital return per Ordinary share is based on the net capital loss for the financial year of £7,074,000 (2024: gain of
£11,940,000), and on 188,678,279 (2024: 189,427,600) Ordinary shares, being the weighted average number of Ordinary shares
in issue during the year.
9 Investments held at Fair Value Through Profit or Loss
Year to
31March 2025
£’000
Year to
31March 2024
£’000
Opening cost 193,353 193,796
Holding gains 128,323 116,512
Opening fair value 321,676 310,308
Purchases at cost 22,379 43,002
Sales – proceeds (42,152) (45,177)
– gains on sales 22,325 1,732
Holding (losses)/gains (27,399) 11,811
Closing fair value 296,829 321,676
Closing cost 195,905 193,353
Holding gains 100,924 128,323
Closing valuation 296,829 321,676
Net gains on the realisation of investments during the year represents the difference between the net proceeds of sale and the
book cost of investments sold.
TRANSACTION COSTS
The Company incurred transaction costs on the purchase of investments of £13,000 and sales of investments of £17,000 (2024:
£29,000 on purchases and £18,000 on sales).
Year to
31March 2025
£’000
Year to
31March 2024
£’000
Gains on sales 22,325 1,732
(Decrease)/increase in holding gains (27,399) 11,811
(Losses)/gains on investments (5,074) 13,543
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 61
10 Current Assets
TRADE AND OTHER RECEIVABLES
As at
31March 2025
£’000
As at
31March 2024
£’000
Due from broker 737 –
Prepayments and accrued income 82 221
Overseas tax recoverable 773 664
1,592 885
The carrying value of the balances above approximates to fair value. There are no amounts which are past due at the year end
(2024: £nil).
CASH AND CASH EQUIVALENTS
These comprise bank balances and cash held by the Company. The carrying amount of these assets approximates to their fair value.
As at
31March 2025
£’000
As at
31March 2024
£’000
Cash at bank and on hand 14,816 242
11 Current Liabilities
As at
31March 2025
£’000
As at
31March 2024
£’000
Trade and other payables:
Investment management and AIFM fee 646 595
Other creditors 193 159
839 754
As at
31March 2025
£’000
As at
31March 2024
£’000
Revolving credit facility:
Revolving credit facility 12,560 856
12,560 856
The Company entered into a three year secured revolving credit facility with ING Bank N.V (“ING”), which will mature on
13September 2026. Drawdowns from the facility are charged at margin over the relevant EURIBOR rate. As at 31 March 2025,
€15million (£12,560,000) of the facility was drawn (2024: €1million (£856,000), at a rate of 4.27%.
Once drawn, the facility will be measured at amortised cost and revalued for exchange rate movements. Any gain or loss
arising from changes in exchange rates is included in the capital reserve and shown in the capital column of the Statement of
Comprehensive Income. Interest costs are charged to capital and revenue in accordance with the Company’s accounting policies.
The carrying value of the balances above approximates to fair value.
page 62 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
Notes to the Financial Statements continued
12 Interest-Bearing Bank Loans
Year to
31March 2025
£’000
Year to
31March 2024
£’000
Opening balance 8,473 8,787
Set up Cost – (98)
Amortisation of set-up costs 33 22
Non-cash foreign currency movements (176) (238)
8,330 8,473
The Company has a €10 million three year secured loan at a fixed rate of 5.105% per annum with ING. This loan will mature on
13September 2026.
Under the bank covenants relating to the loans, the Company is to ensure that at all times the total borrowings of the Company
do not exceed 35% of the Adjusted Net Asset Value (as defined in the loan agreements) and that the Adjusted Net Asset Value
does not fall below £45million (2024: £45million). The Company met all covenant conditions during the year.
The carrying value of the balances above approximates to fair value.
13 Called-up Share Capital
Number
of shares
As at
31 March
2025
£’000
Number
of shares
As at
31 March
2024
£’000
Ordinary shares of 5p
Ordinary shares in issue at the beginning of the year 189,427,600 9,471 189,427,600 9,471
Ordinary shares bought back to Treasury during the year (9,502,921) (475) – –
Ordinary shares in issue at the end of the year 179,924,679 8,996 189,427,600 9,471
Treasury shares (Ordinary shares 5p)
Treasury shares in issue at the beginning of the year – – – –
Ordinary shares bought back to Treasury during the year 9,502,921 475 – –
Treasury shares in issue at the end of the year 9,502,921 475 – –
Total Ordinary shares in issue and in Treasury at the end of the year 189,427,600 9,471 189,427,600 9,471
The Company bought back 9,502,921 Ordinary shares into Treasury at a cost of £14,702,000 (2024: no shares bought back into
Treasury). The cost of shares bought back is included within the capital reserve.
CAPITAL MANAGEMENT
The Company’s capital is represented by the issued Share Capital, Share Premium Account, Capital Redemption Reserve,
Capital Reserve, Revenue Reserve and external debt financing. As at the year end this balance stood at £312,398,000 (2024:
£322,049,000). Details of the movement through each reserve are shown in the Statement of Changes in Equity. The Company is
not subject to any externally imposed capital requirements other than those associated with the loan finance.
The Company’s capital is managed in accordance with its Investment Policy, in pursuit of its Investment Objective, both of which
are detailed in the Business Model and Strategy on pages 17 and 18. The Company’s capital structure is also explained in the
Directors’ Report on page 31.
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 63
14 Net Asset Value per Share
Net asset value per share
As at 31March
Net asset value
As at 31March
2025
p
2024
p
2025
£’000
2024
£’000
NAV per Ordinary Share 162.0 165.1 291,508 312,720
The NAV per share is based on net assets at the year end and on 179,924,679 (2024: 189,427,600) Ordinary shares, being the
number of Ordinary shares in issue at the year end, excluding those shares bought back and held in Treasury.
15 Financial Instruments
The Company’s financial instruments comprise its investment portfolio, cash balances, bank loans, and debtors and creditors
that arise directly from its operations. As an investment trust the Company holds a portfolio of financial assets in pursuit of its
investment objective. The Company makes use of borrowings, as detailed in Notes 11 and 12 and the Chairman’s Statement, to
achieve improved performance in rising markets.
The Company’s principal risks are described in the Business Model and Strategy on pages 17 and 18.
Financial risks arising from the Company’s financial instruments are:
(i) market price risk, being the risk that the value of investment holdings will fluctuate as a result of changes in market prices
caused by factors other than interest rate or currency rate movements;
(ii) interest rate risk, being the risk that the future cash flows of a financial instrument will fluctuate because of changes in
market interest rates;
(iii) foreign currency risk, being the risk that the value of investment holdings, investment purchases, investment sales, bank
loans and accrued income will fluctuate because of movements in currency rates;
(iv) credit risk, being the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that
it has entered into with the Company; and
(v) liquidity risk, being the risk that the Company may not be able to liquidate quickly its investments to meet obligations
associated with its financial liabilities.
FAIR VALUE HIERARCHY
The Company measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in
making the measurements.
Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value
measurement of the relevant assets as follows:
•
Level 1 – valued using quoted prices unadjusted in active markets for identical assets or liabilities.
•
Level 2 – valued by reference to valuation techniques using observable inputs for the asset or liability other than quoted
prices included within 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.
The tables below set out fair value measurements of financial instruments as at the year end, by the level in the fair value
hierarchy into which the fair value measurement is categorised.
The Company held the following categories of financial instruments all of which are included fair value or amortised cost with is
an approximation of fair value as at 31March 2025:
Level 1
£’000
Level 2
£’000
Level 3
£’000
2025
Total
£’000
Level 1
£’000
Level 2
£’000
Level 3
£’000
2024
Total
£’000
Financial instruments
Investments 296,829 – – 296,829 321,676 – – 321,676
There were no transfers between levels in the fair value hierarchy in the year ended 31March 2025 (2024: none).
Cash balances of £14,816,000 (2024: £242,000), debtors of £819,000 (2024: £221,000) and creditors of £839,000 (2024: £754,000)
are considered financial instruments.
page 64 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
Notes to the Financial Statements continued
16 Market Price Risk
Market price risk (i.e. changes in market prices other than those arising from currency risk or interest rate risk) may affect the
value of investments.
The Board manages the risks inherent in the investment portfolio by ensuring full and timely reporting of relevant information
from the Manager. Investment performance and exposure are reviewed at each Board meeting.
The maximum exposure to market price risk is the fair value of investments of £296,829,000 (2024: £321,676,000).
If the investment portfolio valuation fell by 10% from the amount detailed in the financial statements as at 31March 2025, it
would have the effect, with all other variables held constant, of reducing the net capital return before taxation by £29,683,000
(2024: £32,167,000). An increase of 10% in the investment portfolio valuation would have an equal and opposite effect on the net
capital return before taxation. The analysis is based on closing balances only and is not representative of the year as a whole.
17 Interest Rate Risk
FIXED RATE
The Company has a €10million fully drawn fixed rate term loan with ING, with a Sterling equivalent of £8,375,000 as at 31March
2025, at a rate of interest of 5.105% per annum (31 March 2024: €10 million drawn, with a sterling equivalent of £8,473,000, at a
rate of interest of 5.105% per annum). An interest rate sensitivity analysis has not been performed as the Company has borrowed
at a fixed rate of interest.
FLOATING RATE
The Company has a €15million revolving credit facility term with ING of which €15million was drawn, with a Sterling equivalent
of £12,560,000 as at 31March 2025, at a rate of interest of 4.27% per annum (31 March 2024: €1 million drawn, with a sterling
equivalent of £856,000, at a rate of interest of 5.68% per annum).
When the Company retains cash balances, the cash is primarily held in accounts at the custodian. Interest received or paid
on cash balances and bank overdrafts is at market rates and is monitored and reviewed by the Manager and the Board. As at
31March 2025, the cash position of the Company was £14,816,000 (2024: £242,000).
If interest rates had increased by 1.0%, the impact on the profit or loss and the NAV would have been negative £23,000 (2024:
negative £6,000). If interest rates had decreased by 1.0%, the impact on the profit or loss and the NAV would have been positive
£23,000 (2024: positive £6,000). The calculations are based on the floating rate balances as at the respective Balance Sheet dates.
18 Foreign Currency Risk
The Company invests in overseas securities and holds foreign currency cash balances and foreign currency borrowings which
give rise to currency risks. It is not the Company’s policy to hedge this risk.
Foreign currency exposure:
As at 31March 2025
Investments
£’000
Trade
and other
receivables
£’000
Cash
£’000
Trade
and other
payables
£’000
Revolving
credit
facility
£’000
Interest-
bearing
bank loan*
£’000
Net
exposure
£’000
Danish Krone 8,206 5 – – – – 8,211
Euro 136,291 315 14,692 – (12,560) (8,375) 130,363
Norwegian Krone 25,844 27 – – – – 25,871
Swedish Krona 89,948 – – – – – 89,948
Swiss Franc 36,540 426 – – – – 36,966
Total 296,829 773 14,692 – (12,560) (8,375) 291,359
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 65
18 Foreign Currency Risk continued
As at 31March 2024
Investments
£’000
Trade
and other
receivables
£’000
Cash
£’000
Trade
and other
payables
£’000
Revolving
credit
facility
£’000
Interest-
bearing
bank loan*
£’000
Net
exposure
£’000
Danish Krone 6,251 60 – – – – 6,311
Euro 176,388 243 192 – (855) (8,549) 167,419
Norwegian Krone 20,223 27 – – – – 20,250
Swedish Krona 78,642 18 – – – – 78,660
Swiss Franc 40,172 317 – – – – 40,489
Total 321,676 665 192 – (855) (8,549) 313,129
* Par value excluding amortised costs.
If the value of Sterling had weakened by 5% (2024: 5%) against each of the currencies in the portfolio, the impact on the profit or
loss and the NAV would have been positive £14,841,000 (2024: positive £16,084,000). If the value of Sterling had strengthened
by 5% (2024: 5%) against each of the currencies in the portfolio, the impact on the profit or loss and the NAV would have been
negative £14,841,000 (2024: negative £16,084,000). These calculations are based on the foreign currency exposure balances as
at the respective Balance Sheet dates.
19 Credit Risk
Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has
entered into with the Company. The Company has in place a monitoring procedure in respect of counterparty risk which is
reviewed on an ongoing basis. The carrying amounts of financial assets best represent the maximum credit risk exposure at the
Balance Sheet date.
The Company had the following categories of financial assets exposed to credit risk as at 31March:
2025
£’000
2024
£’000
Cash and cash equivalents 14,816 242
Due from brokers and accrued income 737 90
15,553 332
Credit risk arising on transactions with brokers relates to transactions awaiting settlement. Risk relating to unsettled transactions
is considered to be small due to the short settlement period involved and the financial stability and credit quality of the brokers
used, which are monitored on an ongoing basis by the Manager. The Manager also monitors the quality of service provided by
the brokers used to further mitigate this risk.
There were no significant concentrations of credit risk to counterparties at 31March 2025 or 31March 2024. No individual
investment exceeded 5.0% of the investment portfolio at 31March 2025 (2024: none).
A significant majority of the assets of the Company, including those that are traded on a recognised exchange, are held in
segregated accounts on behalf of the Company by The Bank of New York Mellon SA/NV (London Branch), the Company’s
custodian. Bankruptcy or insolvency of this or other custodians may cause the Company’s rights with respect to securities held by
the custodians to be delayed. The Board monitors the Company’s risk by reviewing the custodian’s internal control reports.
20 Liquidity Risk
The Company does not hold unlisted securities (2024: £nil). The Company’s listed securities are considered to be readily
realisable.
However, as with all smaller company investment trusts, there are times when the liquidity of the underlying portfolio is poor,
such as when smaller companies are out of favour or during periods of adverse economic conditions. The Manager focuses
on smaller companies where the opportunities may be more attractive but this can decrease overall underlying liquidity. This
may result in the Manager being unable to buy or sell individual holdings within the portfolio. The Manager constantly reviews
the underlying liquidity of the portfolio and deals with a wide range of brokers to enhance its ability to execute transactions and
minimise liquidity risk. The Company’s overall exposure to liquidity risks is monitored on a regular basis by the Board.
page 66 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
Notes to the Financial Statements continued
20 Liquidity Risk continued
Liquidity risk is mitigated as the Company maintains sufficient cash to pay accounts payable and accrued expenses. As at
31March 2025, the cash position of the Company was £14,816,000 (2024: £242,000).
CONTRACTUAL MATURITY ANALYSIS FOR FINANCIAL LIABILITIES
Contractual maturities of the financial liabilities at the year end at undiscounted amounts, based on the earliest date on which
payment can be required, are as follows:
As at 31March 2025
Within
one month
£’000
Between
one and
three months
£’000
Between
three and
twelve months
£’000
Between
one and
five years
£’000
Total
£’000
Liabilities:
Other creditors 839 – – – 839
Revolving credit facility 12,560 – – – 12,560
Loan and loan interest – – – 8,375 8,375
Total liabilities 13,399 – – 8,375 21,774
As at 31March 2024
Within
one month
£’000
Between
one and
three months
£’000
Between
three and
twelve months
£’000
Between
one and
five years
£’000
Total
£’000
Liabilities:
Other creditors 754 – – – 754
Revolving credit facility 856 – – – 856
Loan and loan interest – – – 8,314 8,314
Total liabilities 1,610 – – 8,314 9,924
21 Related Parties and Transactions with the Manager
The following are considered related parties: the Board of Directors. The Directors of the Company received fees for their services
and dividends from their shareholdings in the Company. Further details are provided in the Directors’ Remuneration Report on
pages 39 to 41.
Transactions between the Company and the Manager are detailed in Note 3 on management fees and Note 11 on fees owed to
the Manager at the Balance Sheet date. The existence of an independent Board of Directors demonstrates that the Company is
free to pursue its own financial and operating policies and therefore, under the AIC SORP, the Manager is not considered to be a
related party.
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 67
Alternative Investment Fund Managers (“AIFM”) Directive (“AIFMD”)
In accordance with the AIFMD, information in relation to the Company’s leverage (as defined on page 71). and the remuneration
of the Company’s AIFM, Montanaro Asset Management, is required to be made available to investors. Detailed regulatory
disclosures including those on the AIFM’s remuneration policy are available on the Company’s website or from Montanaro Asset
Management on request. The Company’s maximum and actual leverage levels at 31March 2025 are shown below:
Leverage exposure
Gross
method
Commitment
method
Maximum limit 200% 200%
Actual 106.87% 106.91%
For the purposes of the AIFMD, leverage is any method which increases the Company’s exposure, including the borrowing of cash
and the use of derivatives. It is expressed as a percentage of Company’s exposure to its NAV and is calculated on both a gross
and commitment method.
Under the gross method, exposure represents the sum of the Company’s positions after deduction of cash and cash equivalents,
without taking account of any hedging or netting arrangements. Under the commitment method, exposure is calculated without
the deduction of cash and cash equivalents and after certain hedging and netting positions are offset against each other.
The leverage limits are set by the AIFM and approved by the Board. The AIFM is also required to comply with the gearing
parameters set by the Board in relation to borrowings. Detailed regulatory disclosures to investors in accordance with the AIFMD
are contained on the AIFM’s website.
AIFMD Disclosures (Unaudited)
page 68 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
Alternative Performance Measures
Dividends per Ordinary share
Total dividends paid to shareholders in respect of the year
ended 31 March 2025, comprising the interim dividend, paid
on 22 January 2025 of 0.3p and the second interim dividend, to
be paid on 7 August 2025 of 0.96p.
Premium/(discount)
If the share price of an investment trust is less than its NAV per
share, the shares are trading at a discount. If the share price
is greater than the NAV per share, the shares are trading at a
premium.
As at 31 March 2025, the NAV per share was 162.0p
(2024:165.1p) and the share price was 148.5p (2024: 142.5p).
The discount is therefore calculated at 8.3% (2024: discount
of13.7%).
Net Gearing Employed
Unlike open-ended investment companies, investment trusts
have the ability to borrow to invest. This term is used to
describe the level of borrowings that an investment trust has
undertaken, and is stated as a percentage of shareholders’
funds. The higher the level of borrowings, the higher the
gearing ratio.
Net gearing is calculated as total debt, net of cash and cash
equivalents, as a percentage of the total shareholders’ funds.
As at 31 March 2025, interest bearing bank loans and revolving
credit facility were £20,890,000 (2024: £9,329,000), cash and
cash equivalents were £14,816,000 (2024: £242,000) and net
assets were £291,508,000 (2024: £312,720,000). As at 31 March
2025, gearing is therefore equal to 2.1% (2024: 2.9%).
Ongoing Charges
All operating costs expected to be incurred in the future and
that are payable by the Company expressed as a proportion of
the average net assets of the Company over the reporting year.
The costs of buying and selling investments are excluded, as
are interest costs, taxation, non-recurring costs and the costs
of buying back or issuing Ordinary shares.
For the
year ended
31March 2025
£’000
For the
year ended
31March 2024
£’000
Total expenditure (a) 3,234 2,982
Average monthly net assets (b) 308,082 286,505
Ongoing Charges (a/b) 1.0% 1.0%
Portfolio turnover
Calculated using total sales proceeds as a percentage of the
average net assets during the year.
For the
year ended
31March 2025
For the
year ended
31March 2024
Average net assets (£'000) (a) 308,082 286,505
Sales (£'000) (b) 42,152 45,177
Portfolio turnover (b)/(a) 14% 16%
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 69
Share Price and NAV per share Returns
Capital Return measures the effect of any rise or fall in the share price or NAV per share, excluding any dividends paid.
Total Return measures the effect of any rise or fall in the share price or NAV per share, plus dividends paid which are reinvested
at the prevailing NAV or share price on the ex- dividend date.
Share Price Capital Return calculation as at 31 March 2025
Share price as at 31 March 2025 148.50 (a)
Share price as at 31 March 2024 142.50 (b)
Share Price Capital Return 4.21% ((a-b)/b)
Impact of dividends reinvested 0.85% (Note 1)
Share Price Total Return 5.06%
Note 1 – Share Price impact of dividends reinvested
Dividend
Dividend
per share
(pence)
(a)
Ex-dividend
date
Share price at
ex-dividend
date
(b)
Impact of
dividends
reinvested
(a)/(b)
Interim
dividend 0.3
19 December
2024 138.50 0.22%
Final
dividend 0.9
15 August
2024 142.00 0.63%
0.85%
NAV Capital Return calculation as at 31 March 2025
NAV per share as at 31 March 2025 162.00 (a)
NAV per share as at 31 March 2024 165.10 (b)
NAV Capital Return (1.88%) ((a-b)/b)
Impact of dividends reinvested 0.74% (Note 1)
NAV Total Return (1.14%)
Note 1 – NAV impact of dividends reinvested
Dividend
Dividend
per share
(pence)
(a)
Ex-dividend
date
NAV per share
at ex-dividend
date
(b)
Impact of
dividends
reinvested
(a)/(b)
Interim
dividend 0.3
19 December
2024 159.20 0.19%
Final
dividend 0.9
15 August
2024 164.20 0.55%
0.74%
page 70 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
Glossary of Terms
Alternative Investment Fund Managers Directive (“AIFMD”)
Issued by the European Parliament in 2012 and 2013, the
Directive requires that all investment vehicles in the European
Union, including investment trusts, must, with effect from
22July 2014, appoint a Depositary and an Alternative
Investment Fund Manager (“AIFM”). The board of directors of
an investment trust, nevertheless, remains fully responsible
for all aspects of the Company’s strategy, operations and
compliance with regulations.
Association of Investment Companies (“AIC”)
The Association of Investment Companies is the trade body for
Closed-end Investment Companies (www.theaic.co.uk).
Benchmark
This is a measure against which an investment trust’s
performance is compared. The benchmark of the Company
is the MSCI Europe ex-UK SmallCap Index (capital return in
Sterling terms). The index averages the performance of a
defined selection of companies listed in European smaller
company stock markets and gives an indication of how those
markets have performed in any period.
Closed-end Investment Company
A company, including an investment trust, with a fixed issued
ordinary share capital which is traded on an exchange at
a price not necessarily related to the NAV of the company
and where shares can only be issued or bought back by the
company in certain circumstances. This contrasts with an
open-ended investment company, which has units not traded
on an exchange but issued or bought back from investors at a
price directly related to the NAV.
Custodian
A specialised financial institution responsible for safeguarding,
worldwide, the listed securities and certain cash assets of the
Company, as well as the income arising therefrom, through
provision of custodial, settlement and associated services. The
Company’s Custodian is The Bank of New York Mellon SA/NV
(London Branch).
Depositary
Under the AIFMD rules applying from 22July 2014, the
Company must appoint a Depositary, whose duties in respect
of investments, cash and similar assets include: safekeeping;
verification of ownership and valuation; and cash monitoring.
The Depositary has strict liability for loss of any investments or
other assets where it has safekeeping duties. The Depositary’s
oversight duties include, but are not limited to, oversight
of share buybacks, dividend payments and adherence to
investment limits. The Company’s Depositary is The Bank of
New York Mellon (International) Limited.
Dividend
The income from an investment. Some investment trusts
pay dividends on a quarterly or monthly basis. The Company
currently pays dividends twice a year.
Gearing
Gearing is calculated as total liabilities less current assets
divided by net assets.
International Accounting Standards
International Accounting Standards in conformity with the
requirements of the Companies act 2006.
Investment Manager
The Company’s investment manager is Montanaro Asset
Management. The responsibilities and remuneration of the
Manager are set out in the Business Model and Strategy on
page 18 and in the Directors’ Report on page 29.
Investment Trust
A closed-end investment company which satisfies the
requirements of Section 1158 of the Corporation Tax Act 2010.
Companies which meet these criteria are exempt from having
to pay tax on the capital gains they realise from sales of the
investments within their portfolios.
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 71
Leverage
As defined under the AIFMD rules, leverage is any method
by which the exposure of an AIF is increased through
borrowing of cash or securities or leverage embedded in
derivative positions. Leverage is broadly equivalent to gearing,
but is expressed as a ratio between the assets (excluding
borrowings) and the net assets (after taking account of
borrowings). Under the gross method, exposure represents
the sum of the Company’s positions after deduction of cash
and cash equivalents, without taking account of any hedging
or netting arrangements. Under the commitment method,
exposure is calculated without the deduction of cash and cash
equivalents and after certain hedging and netting positions are
offset against each other.
Marked to Market
Accounting for the fair value of an asset or liability that can
change over time and reflects its current market value rather
than its book cost.
Market Capitalisation
The stock market value of a company as determined by
multiplying the number of shares in issue, excluding those
shares held in Treasury, by the market price of the shares.
Net Assets (or Shareholders’ Funds)
This is calculated as the value of the investments and other
assets of an investment trust, plus cash and debtors, less
borrowings and any other creditors. It represents the
underlying value of an investment trust at a point in time.
Net Asset Value (“NAV”) per Ordinary share
This is calculated as the net assets of an investment trust
divided by the number of Ordinary shares in issue, excluding
those shares held in Treasury.
Ordinary shares
The main type of equity capital issued by conventional
investment trusts. Shareholders are entitled to their share of
both income, in the form of dividends paid by the investment
trust, and any capital growth. The Company has only Ordinary
shares in issue.
Share Price
The value of a share at a point in time as quoted on a stock
exchange. The shares of The Company are quoted on the Main
Market of the London Stock Exchange.
Statement of Recommended Practice (“SORP”)
Statement of Recommended Practice “Financial Statements
of Investment Trust Companies and Venture Capital Trusts”
issued by the AIC.
Total Assets
This is calculated as the value of the investments and other
assets of an investment trust, plus cash and debtors.
page 72 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
Shareholder Information
Source of Further Information
Your Board is committed to shareholder engagement. To receive regular email news and updates about the Company please
visit: www.montanaro.co.uk/trust/mesct.
Useful information on the Company, such as investor updates and half year and annual reports can also be found on the website.
Key Dates
31March 2025 Company year end
7 August 2025 Payment of second interim dividend
4 September 2025 Annual General Meeting
November 2025 Bi-annual tender offer
November 2025 Interim results announced
January 2026 Payment of expected first interim dividend
Dividends
Shareholders who wish to have dividends paid directly into a bank account rather than by cheque to their registered address can
complete a Mandate Form for this purpose. Mandates can be obtained from Equiniti Limited on request at the address shown on
page 82.
Non-Mainstream Pooled Investment (“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 Equiniti Limited. In the event of queries regarding your holding, please
contact the registrar. You can contact the registrar by calling +44 (0)371 384 2030. 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. Lines are
open between 08:30 – 17:30, Monday to Friday excluding public holidays in England and Wales. Or alternatively you may contact
the registrar at shareholderenquiries@equiniti.com.
Share Price and NAV
The Company’s Ordinary shares are listed on the main market of the London Stock Exchange. The market price of these shares
can be found in the London Stock Exchange Daily Official List. The Company’s NAV is published daily and released through the
London Stock Exchange’s Regulatory News Service and is available on the Company’s website.
Common Reporting Standard
Under the Common Reporting Standard financial institutions, including investment trust companies, are required to provide
personal information to HMRC on investors who meet certain criteria set out in the legislation. On an annual basis, the Company
will provide information to the local tax authority on the tax residencies of non-UK based certificated shareholders and corporate
entities. The local tax authority may exchange this information with the tax authorities of another country or countries in which
the shareholder may be a tax resident, where those countries, or the tax authorities in those countries, have entered into
agreements to exchange financial account information. New shareholders, excluding those whose shares are held in CREST,
entered on the Company’s share register, will be sent a certification form for the purposes of collecting this information.
Share Dealing
Investors wishing to purchase more shares in the Company or to sell all or part of their existing holding may do so through their
financial adviser, stockbroker or, if financial advice is not required, through a fund supermarket or any other execution-only
platform. Further information can be found at: www.montanaro.co.uk/trust/mesct.
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 73
Data Protection
The Company is committed to protecting and respecting the confidentiality, integrity and security of the personal data it holds.
For information on the processing of personal data, please see the privacy policy on the website at www.montanaro.co.uk.
Nominee Code
Where shares are held in a nominee company name, the Company undertakes:
•
to provide the nominee company with multiple copies of shareholder communications, so long as an indication of quantities
has been provided in advance;
•
to allow investors holding shares through a nominee company to attend general meetings, provided the correct authority
from the nominee company is available; and
•
nominee companies are encouraged to provide the necessary authority to underlying shareholders to attend the Company’s
general meetings.
AIC
The Company is a member of the Association of Investment Companies.
Stocks and Shares Individual Savings Accounts (“ISA”)
ISAs are a tax-efficient method of investment and the Company’s shares are eligible investments for inclusion in an ISA.
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.
If you receive unsolicited investment advice or requests:
•
Check the Financial Services Register at www.fca.org.uk to see if the person or firm contacting you is authorised by the
Financial Conduct Authority (“FCA”).
•
Call the FCA on 0800 111 6768 if the firm does not have contact details on the Register or you are told they are out of date.
•
Search the list of unauthorised firms to avoid at www.fca.org.uk/scams.
•
Consider that if you buy or sell shares from an unauthorised firm you will not have access to the Financial Ombudsman
Service or Financial Services Compensation Scheme.
•
Think about getting independent financial and professional advice.
If you are approached by fraudsters please tell the FCA by using the share fraud reporting form at www.fca.org.uk/scams where
you can find out more about investment scams. You can also call the FCA Consumer Helpline on 0800 111 6768.
If you have already paid money to share fraudsters you should contact Action Fraud on 0300 123 2040.
page 74 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
Notice of Annual General Meeting
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about any aspect
of the proposals referred to in this document or about the action which you should take, you should seek your own advice
immediately from a stockbroker, solicitor, accountant or other independent professional adviser. If you have sold or otherwise
transferred all of your shares, please pass this document, together with the accompanying documents, to the purchaser or
transferee, or to the person who arranged the sale or transfer, so they can pass these documents to the person who now holds
the shares.
Notice is hereby given that the Annual General Meeting of Montanaro European Smaller Companies Trust plc (the “Company”)
will be held at Montanaro Asset Management, 53 Threadneedle Street, London, EC2R 8AR, on Thursday, 4September 2025 at
11.00am for the purposes of considering and, if thought fit, passing the following Resolutions, of which Resolutions 1 to 10 will be
proposed as Ordinary Resolutions and Resolutions 11 to 13 will be proposed as Special Resolutions.
ORDINARY RESOLUTIONS
RESOLUTION 1 – ANNUAL REPORT AND ACCOUNTS
That the Annual Report and Accounts of the Company for the year ended 31March 2025 be received.
RESOLUTION 2 – ANNUAL REPORT ON DIRECTORS’ REMUNERATION
That the Annual Report on Directors’ Remuneration for the year ended 31March 2025 be approved.
RESOLUTION 3 – DIVIDEND POLICY
That the Company’s Dividend Policy as set out in the Annual Report be approved.
RESOLUTION 4 – ELECTION OF DIRECTOR
To elect Ms H Williams as a Director of the Company.
RESOLUTION 5 – RE-ELECTION OF DIRECTOR
That Mr R M Curling, who retires annually, be re-elected as a Director.
RESOLUTION 6 – RE-ELECTION OF DIRECTOR
That Ms C A Roxburgh, who retires annually, be re-elected as a Director.
RESOLUTION 7 – RE-ELECTION OF DIRECTOR
That Mr G Neilly, who retires annually, be re-elected as a Director.
RESOLUTION 8 – RE-APPOINTMENT OF AUDITORS
That PricewaterhouseCoopers LLP be re-appointed as the Company’s Auditors, to hold office from the conclusion of this Meeting
until the conclusion of the next general meeting at which accounts are laid before the Company.
RESOLUTION 9 – AUDITOR’S REMUNERATION
That the Directors be authorised to determine the Auditor’s remuneration.
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 75
RESOLUTION 10 – AUTHORITY TO ALLOT SHARES
That, in substitution for any existing authority but without prejudice to the exercise of any such authority prior to the date of the
passing of this resolution, the Board of Directors of the Company (the “Board”) be and is hereby generally and unconditionally
authorised pursuant to and in accordance with section 551 of the Companies Act 2006 to exercise all the powers of the Company
to allot shares in the Company and to grant rights to subscribe for or to convert any security into shares in the Company up to an
aggregate nominal amount of £799,476, provided that this authority shall expire at the conclusion of the Annual General Meeting
of the Company to be held in 2026 or, if earlier, on 30September 2026 save that the Company may before such expiry make
an offer or enter into an agreement which would or might require shares to be allotted, or rights to subscribe for or to convert
securities into shares to be granted, after such expiry and the Board may allot shares or grant such rights in pursuance of such
an offer or agreement as if the authority conferred hereby had not expired. The Directors will use this authority when it is in the
best interests of the Company to issue Ordinary shares for cash and will only issue new shares at a price representing a premium
to the NAV per share at the time of issuance.
SPECIAL RESOLUTIONS
RESOLUTION 11 – AUTHORITY TO ALLOT SHARES OTHER THAN ON A PRE-EMPTIVE BASIS
That, subject to the passing of Resolution 10 and in substitution for any existing authority, but without prejudice to the exercise
of any such authority prior to the date of the passing of this resolution, the Board of Directors of the Company (the “Board”)
be and is hereby generally empowered pursuant to sections 570 and 573 of the Companies Act 2006 (the “Act”) to allot equity
securities (within the meaning of section 560 of the Act) (including the grant of rights to subscribe for, or to convert any securities
into, Ordinary shares of 5pence each in the capital of the Company (“Ordinary shares”)) wholly for cash either pursuant to the
authority conferred on them by such Resolution 10 or by way of a sale of Treasury shares (within the meaning of section 560(3) of
the Act) as if section 561(1) of the Act did not apply to any such allotment or sale, provided that this power shall be limited to the
allotment of equity securities and the sale of Treasury shares:
(i) in connection with a rights issue, open offer or other pre-emptive offer in favour of the holders of Ordinary shares who are
on the register of members on a date fixed by the Board where the equity securities respectively attributable to the interests
of all such holders are proportionate (as nearly as may be practicable) to the respective numbers of Ordinary shares held
by them on that date (subject to such exclusions or other arrangements in connection with the rights issue, open offer
or other offer as the Board deem necessary or expedient to deal with shares held in Treasury, fractional entitlements to
equity securities and to deal with any legal or practical problems or issues arising in any overseas territory or under the
requirements of any regulatory body or stock exchange); and
(ii) otherwise than pursuant to sub-paragraph (i) above, up to an aggregate nominal amount of £799,476, and shall expire
(unless previously renewed, varied or revoked by the Company in general meeting) at the conclusion of the Annual General
Meeting of the Company to be held in 2026 or, if earlier, on 30September 2026 save that the Company may before such
expiry make an offer or agreement which would or might require equity securities to be allotted after such expiry and the
Board may allot equity securities in pursuance of such an offer or agreement as if the authority conferred hereby had not
expired. This power shall authorise the Board to issue equity securities at such issue price as the Board may determine
(including, without limitation, where equity securities are being issued from Treasury at a price below the net asset value per
Ordinary share of the Company at the time of the relevant issue).
page 76 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
Notice of Annual General Meeting continued
RESOLUTION 12 – AUTHORITY TO BUYBACK SHARES
The Company be and is hereby generally and unconditionally authorised for the purposes of section 701 of the Companies Act
2006 (the “Act”) to make one or more market purchases (as defined in section 693(4) of the Act) of ordinary shares of 5pence
each in the capital of the Company (“Ordinary shares”) on such terms and in such manner as the Board of Directors may
determine provided that:
(i) the maximum aggregate number of Ordinary shares which may be purchased is 23,968,306 (or if less, 14.99% of the
number of Ordinary shares in issue (excluding Treasury shares) immediately prior to the passing of this resolution);
(ii) the minimum price which may be paid for an Ordinary share is 5pence (exclusive of associated expenses);
(iii) the maximum price which may be paid for an Ordinary share (exclusive of associated expenses) is the higher of:
(a) 105per cent of the average of the market value of an Ordinary share for the five business days immediately preceding
the day on which the Ordinary share is purchased; and
(b) the value of an Ordinary share calculated on the basis of the higher price quoted for
(i) the last independent trade of; and
(ii) the highest current independent bid for any number of Ordinary shares on the trading venue where the purchase
is carried out; and
(iv) unless previously renewed, varied or revoked, this authority shall expire at the conclusion of the Annual General Meeting
of the Company to be held in 2026 or, if earlier, on 30September 2026 save that the Company may before such expiry
enter into a contract to purchase Ordinary shares which will or may be completed wholly or partly after such expiry and a
purchase of Ordinary shares may be made pursuant to any such contract.
RESOLUTION 13 – GENERAL MEETING NOTICE PERIOD
That the Company be and is hereby generally and unconditionally authorised to hold general meetings (other than annual
general meetings) on 14 clear days’ notice, such authority to expire at the conclusion of the next Annual General Meeting of
theCompany.
By order of the Board
JUNIPER PARTNERS LIMITED
Company Secretary
18 June 2025
Registered office:
28 Walker Street
Edinburgh EH3 7HR
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 77
Explanation of Notice of Annual General Meeting
Resolution 1 – To receive the Annual Report and Financial Statements
The Directors are required to present the financial statements, Strategic Report, Directors’ Report and Auditor’s Report to the
meeting. These are contained in the Company’s Annual Report and Accounts for the year ended 31March 2025 (the “Annual
Report”). A resolution to receive the financial statements, together with the Strategic Report, Directors’ Report and the Auditor’s
Report on those accounts is included as an ordinary resolution.
Resolution 2 – Remuneration Report
An advisory resolution to approve the Directors’ Remuneration Report (set out in the Annual Report) is included.
Resolution 3 – Dividend Policy
The Board proposes an amendment to the Dividend Policy to include the following additional wording “Under normal market
conditions the Company will pay two interim dividends per year, aligning with the release of the Annual and Interim Reports.”
Please refer to page 18 for further details.
As a result of the timing of the payment of the Company’s dividends payments the Company’s shareholders are unable to
approve a final dividend. As an alternative, the Board puts the Company’s dividend policy to shareholders for approval on an
annual basis.
Resolutions 4 to 7 – Election/Re-election of Directors
In line with the recommendations of the 2019 AIC Corporate Governance Code, all Directors of the Company are required to
retire and offer themselves for re-election at each AGM. In accordance with this requirement, Mr Curling, Ms Roxburgh and
MrNeilly will retire and offer themselves for re-election as Directors. Ms Williams will be standing for election to the Board having
been appointed as a Director since the last AGM.
All of the Directors seeking re-election are recommended by the Board for re-election. Full biographies of all of the Directors are
set out in the Annual Report on pages 27 and 28 and are also available for viewing on the Company’s website https://montanaro.
co.uk/trust/montanaro-european-smaller-companies-trust/. The Nomination Committee considered the Directors’ performance
and recommended their re election and the Board agrees that it is in the best interests of shareholders that each of the Directors
be re-elected.
Resolutions 8 and 9 – Re-appointment and remuneration of Auditor
At each meeting at which the Company’s financial statements are presented to its members, the Company is required to appoint
an auditor to serve until the next such meeting. The Board, on the recommendation of the Audit Committee, recommends the
re-appointment of PricewaterhouseCoopers LLP as Auditor to the Company. The Auditor’s re-appointment will be proposed to
the AGM as Resolution 8. Resolution 9 authorises the Directors to fix the Auditor’s remuneration.
Resolution 10 – Authority to allot ordinary shares
Resolution 10 authorises the Board to allot Ordinary shares generally and unconditionally in accordance with Section 551 of the
Companies Act 2006 (the “Act”) up to an aggregate nominal value of £799,476, representing approximately 10% of the issued
Ordinary share capital at the date of the Notice, excluding shares held in Treasury. This authority shall expire at the nextAGM.
Resolution 11 – Authority to disapply pre-emption rights
Resolution 11 is a special resolution which is being proposed to authorise the Directors to disapply the pre-emption rights of
existing Shareholders in relation to issues of Ordinary shares under Resolution 10 (being in respect of Ordinary shares up to an
aggregate nominal value of £799,476, representing approximately 10% of the Company’s issued Ordinary share capital, excluding
Treasury shares, as at the date of the Notice). This authority shall expire at the next AGM.
The Directors will only allot new shares pursuant to the authorities proposed to be conferred by Resolutions 10 and 11 if
they believe it is advantageous to the Company’s shareholders to do so. The Board’s policy regarding the issue of shares from
Treasury is described on page 32.
page 78 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
Notice of Annual General Meeting continued
Resolution 12 – Purchase of own shares
Resolution 12 is a special resolution which will grant the Company authority to make market purchases of up to 23,968,306
Ordinary shares, representing 14.99% of the Ordinary shares in issue as at the date of the Notice. The Ordinary shares bought
back will either be cancelled or placed into Treasury, at the determination of the Directors. The maximum price which may be
paid for each Ordinary share must not be more than the higher of (i) 105per cent of the average of the market value of an
Ordinary shares for the five business days immediately preceding the day on which the purchase is made or (ii) the value of
an Ordinary share calculated on the basis of the higher price quoted for: (a) the last independent trade of; and (b) the highest
current independent bid for any number of Ordinary shares on the trading venue where the purchase is carried out. The
minimum price which may be paid for each Ordinary share is £0.05.
This power will only be exercised if, in the opinion of the Directors, a purchase would result in an increase in the NAV per share
and be in the best interests of the shareholders as a whole. The Board’s intention is to apply an active discount management
policy, and to consider a buyback of shares where the discount of the share price to the NAV per share is greater than 10%
for a sustained period of time and is significantly wider than the average for similar trusts. Any such transaction must be
value enhancing for shareholders and the Board will take into consideration the effect of the buyback on the liquidity of the
Company’sshares.
This authority shall expire at the next AGM, when a resolution to renew the authority will be proposed.
Resolution 13 – Notice period for general meetings
Resolution 13 is being proposed to enable general meetings to be held on 14 clear days’ notice. The minimum notice period for
listed company general meetings is 21 clear days, but companies have an ability to reduce this period to 14 clear days (other
than for annual general meetings), provided that the company offers facilities for shareholders to vote by electronic means and
that there is an annual resolution of shareholders approving the reduction in the minimum period for notice of general meetings
(other than annual general meetings) from 21 clear days to 14 clear days. The Board is therefore proposing Resolution 14 as a
special resolution to ensure that the minimum required period for notice of general meetings of the Company (other than annual
general meetings) is 14 clear days. The Directors believe it is in the best interests of the shareholders of the Company to preserve
the shorter notice period, although it is intended that this flexibility will be used only for non-routine business and where merited
in the interests of shareholders as a whole. The approval will be effective until the Company’s next Annual General Meeting when
it is intended that a similar resolution will be proposed.
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 79
Notes
1. Attending the Annual General Meeting in Person
If you wish to attend the Annual General Meeting in person, you should arrive at the venue for the Annual General Meeting in good
time to allow your attendance to be registered. It is advisable to have some form of identification with you as you may be asked to
provide evidence of your identity to the Company’s registrar, Equiniti Limited (the “Registrar”), prior to being admitted to the Annual
General Meeting.
2. Appointment of Proxies
Members are entitled to appoint one or more proxies to exercise all or any of their rights to attend, speak and vote at the Annual
General Meeting. A proxy need not be a member of the Company but must attend the Annual General Meeting to represent a
member. To be validly appointed a proxy must be appointed using the procedures set out in these notes and in the notes to the
accompanying proxy form.
If members wish their proxy to speak on their behalf at the meeting, members will need to appoint their own choice of proxy (not the
Chairman of the Annual General Meeting) and give their instructions directly to them.
Members can only appoint more than one proxy where each proxy is appointed to exercise rights attached to different shares.
Members cannot appoint more than one proxy to exercise the rights attached to the same share(s). If a member wishes to appoint
more than one proxy, they should contact the Registrar on +44 (0) 371 384 2461. Lines are open from 8.30am to 5.30pm, Monday
to Friday excluding public holidays in England and Wales. If calling from outside of the UK, please ensure the country code is used.
A member may instruct their proxy to abstain from voting on any resolution to be considered at the meeting by marking the
‘Abstain’ option when appointing their proxy. It should be noted that an abstention is not a vote in law and will not be counted in the
calculation of the proportion of votes ‘For’ or ‘Against’ the resolution.
The appointment of a proxy will not prevent a member from attending the Annual General Meeting and voting in person if he or she
wishes.
A person who is not a member of the Company but who has been nominated by a member to enjoy information rights does not
have a right to appoint any proxies under the procedures set out in these notes and should read note 8 below.
It is possible for you to submit your proxy votes online by visiting Equiniti’s Shareview website at www.shareview.co.uk and logging in
to your Shareview Portfolio.
Click on the link to vote and follow the on-screen instructions. If you have not yet registered for a Shareview Portfolio, please go to
www.shareview.co.uk and enter the requested information. It is important that you register for a Shareview Portfolio to allow enough
time to complete the registration and authentication processes. For an electronic proxy appointment to be valid, the Registrar must
receive it no later than 11.00am on 2September 2025.
Should you complete your Form of Proxy electronically and then post a hard copy, the Form that arrives last will be counted to the
exclusion of instructions received earlier, whether electronic or postal. Please refer to the terms and conditions of the service on the
website.
3. Appointment of a Proxy Using a Proxy Form
A proxy form for use in connection with the Annual General Meeting is enclosed. To be valid, any proxy form or other instrument
appointing a proxy, together with any power of attorney or other authority under which it is signed or a certified copy thereof, must
be received by post or (during normal business hours only) by hand by the Registrar at FREEPOST RTHJ-CLLL KBKU, Equiniti, Aspect
House, Spencer Road, Lancing BN99 6DA no later than 48 hours (excluding non-working days) before the time of the Annual General
Meeting or any adjournment of that meeting.
If you do not have a proxy form and believe that you should have one, or you require additional proxy forms, please contact the
Registrar on +44 (0) 371 384 2461. Lines are open from 8.30am to 5.30pm, Monday to Friday excluding public holidays in England
and Wales. If calling from outside of the UK, please ensure the country code is used.
4. Appointment of a Proxy Through CREST
CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so by using the
procedures described in the CREST Manual and by logging on to the following website: www.euroclear.com. CREST personal members
or other CREST sponsored members, and those CREST members who have appointed (a) voting service provider(s), should refer to their
CREST sponsor or voting service provider(s) who will be able to take the appropriate action on their behalf.
In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a “CREST
Proxy Instruction”) must be properly authenticated in accordance with Euroclear UK & Ireland Limited’s specifications, and must
contain the information required for such instruction, as described in the CREST Manual. The message, regardless of whether it
page 80 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
Notice of Annual General Meeting continued
constitutes the appointment of a proxy or is an amendment to the instruction given to a previously appointed proxy, must in order
to be valid, be transmitted so as to be received by the Registrar (ID RA19) no later than 48 hours (excluding non-working days) before
the time of the Annual General Meeting or any adjournment of that meeting. For this purpose, the time of receipt will be taken to be
the time (as determined by the timestamp applied to the message by the CREST Application Host) from which the Registrar is able to
retrieve the message by enquiry to CREST in the manner prescribed by CREST.
After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee through
other means. CREST members and, where applicable, their CREST sponsors or voting service provider(s) should note that Euroclear
UK & Ireland Limited does not make available special procedures in CREST for any particular message. Normal system timings and
limitations will, therefore, apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member
concerned to take (or, if the CREST member is a CREST personal member, or sponsored member, or has appointed a voting service
provider(s), to procure that his/her CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure
that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where
applicable, their CREST sponsors or voting system providers are referred, in particular, to those sections of the CREST Manual
concerning practical limitations of the CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated
Securities Regulations 2001.
If you are an institutional investor, you may be able to appoint a proxy electronically via the Proxymity platform, a process which
has been agreed by the Company and approved by the Registrar. For further information regarding Proxymity, please go to
www.proxymity.io. Your proxy must be lodged by 11.00am on 2September 2025 in order to be considered valid. Before you can
appoint a proxy via this process you will need to have agreed to Proxymity’s associated terms and conditions. It is important that you
read these carefully as you will be bound by them, and they will govern the electronic appointment of your proxy.
5. Appointment of Proxy by Joint Holders
In the case of joint holders, where more than one of the joint holders purports to appoint one or more proxies, only the purported
appointment submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of joint
holders appear in the Company’s register of members in respect of the joint holding (the first named being the most senior).
6. Corporate Representatives
Any corporation which is a member can appoint one or more corporate representatives. Members can only appoint more than one
corporate representative where each corporate representative is appointed to exercise rights attached to different shares. Members
cannot appoint more than one corporate representative to exercise the rights attached to the same share(s).
7. Entitlement to Attend and Vote
To be entitled to attend and vote at the Annual General Meeting (and for the purpose of determining the votes they may cast), members
must be registered in the Company’s register of members at 6.30pm on 2September 2025 (or, if the Annual General Meeting is
adjourned, at 6.30pm on the day two days prior to the adjourned meeting). Changes to the register of members after the relevant
deadline will be disregarded in determining the rights of any person to attend and vote at the Annual General Meeting.
8. Nominated Persons
Any person to whom this notice is sent who is a person nominated under section 146 of the Companies Act 2006 to enjoy
information rights (a “Nominated Person”) may, under an agreement between him/her and the member by whom he/ she was
nominated, have a right to be appointed (or to have someone else appointed) as a proxy for the Annual General Meeting. Nominated
Person has no such proxy appointment right or does not wish to exercise it, he/she may, under any such agreement, have a right to
give instructions to the member as to the exercise of voting rights.
9. Voting Through the Platforms
If you hold your shares through an investment platform or other nominee services, the Board encourages you to contact your
platform provider or nominee as soon as possible to make arrangements to vote in respect of your holding. Voting differs between
the major platforms, and you should be aware that deadlines for voting through the platforms may be earlier than the Company’s
proxy voting deadline.
Further information on how to vote across the most common investment platforms is available at the following link:
http://www.theaic.co.uk/how-to-vote-your-shares.
10. Website Giving Information Regarding the Annual General Meeting
Information regarding the Annual General Meeting, including information required by section 311A of the 2006 Act, and a copy of
this notice of Annual General Meeting is available from www.montanaro.co.uk.
Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025 page 81
11. Audit Concerns
Members should note that it is possible that, pursuant to requests made by members of the Company under section 527 of the
2006 Act, the Company may be required to publish on a website a statement setting out any matter relating to: (a) the audit of the
Company’s accounts (including the Auditor’s report and the conduct of the audit) that are to be laid before the Annual General
Meeting; or (b) any circumstance connected with an auditor of the Company ceasing to hold office since the previous meeting at
which annual accounts and reports were laid in accordance with section 437 of the 2006 Act. The Company may not require the
members requesting any such website publication to pay its expenses in complying with sections 527 or 528 of the 2006 Act. Where
the Company is required to place a statement on a website under section 527 of the 2006 Act, it must forward the statement to the
Company’s auditor not later than the time when it makes the statement available on the website. The business which may be dealt
with at the Annual General Meeting includes any statement that the Company has been required under section 527 of the 2006 Act
to publish on a website.
12. Members resolution
Under Section 338 and Section 338A of the Companies Act 2006, members meeting the threshold requirements in those sections
have the right to require the Company (a) to give to members of the Company entitled to receive notice of meeting, notice of any
resolution which may properly be moved and is intended to be moved at the meeting and/or (b) to include in the business to be dealt
with at the meeting any matter (other than a proposed resolution) which may be properly included in the business.
A resolution may properly be moved or a matter may properly be included in the business unless (a) (in the case of resolution only) it
would, if passed, be ineffective (whether by reason of inconsistency with any enactment or the Company’s constitution or otherwise), (b) it
is defamatory of any person, or (c) it is frivolous or vexatious. Such a request may be in hard copy form or in electronic form, must identify
the resolution of which notice is to be given or the matter to be included in the business, must be authorised by the person or persons
making it, must be received by the Company no
t later than 24July 2025, being the date six weeks before the meeting, and (in the case of a
matter to be included in the business only) must be accompanied by a statement setting out the grounds for the request.
13. Voting Rights
As at 17June 2025 (being the latest practicable date prior to the publication of this notice) the Company had 159,895,306 Ordinary
shares in issue of £0.05 each. Each Ordinary share (other than those held in Treasury) carries one vote. The total voting rights in the
Company as at 17June 2025 were 159,895,306 votes.
14. Notification of Shareholdings
Any person holding 3% or more of the total voting rights of the Company who appoints a person other than the Chairman of the
Annual General Meeting as his/her proxy will need to ensure that both he/she, and his/her proxy, comply with their respective
disclosure obligations under the UK Disclosure Guidance and Transparency Rules.
15. Further Questions and Communication
Under section 319A of the 2006 Act, the Company must cause to be answered any question relating to the business being dealt
with at the Annual General Meeting put by a member attending the meeting unless answering the question would interfere unduly
with the preparation for the meeting or involve the disclosure of confidential information, or the answer has already been given on a
website in the form of an answer to a question, or it is undesirable in the interests of the Company or the good order of the meeting
that the question be answered. Members who have any queries about the Annual General Meeting should contact the Company
Secretary, Juniper Partners Limited at 28 Walker Street, Edinburgh EH3 7HR. Members may not use any electronic address provided
in this notice or in any related documents (including the Annual Report and Accounts and proxy form) to communicate with the
Company for any purpose other than those expressly stated.
16. Documents Available for Inspection
The following documents will be available for inspection at the registered office of the Company during normal business hours
on any weekday (Saturdays, Sundays and English public holidays excepted) from the date of this notice until the conclusion of the
Annual General Meeting:
•
copies of the Directors’ letters of appointment; and
•
copies of the Directors’ deeds of indemnity.
None of the Directors has a service contract with the Company.
17. Personal data
Personal data provided by shareholders at or in relation to the Meeting will be processed in line with the Company’s privacy policy.
page 82 Montanaro European Smaller Companies Trust plc Annual Report and Accounts 2025
INVESTMENT MANAGER AND ALTERNATIVE INVESTMENT
FUNDMANAGER (“AIFM”)
Montanaro Asset Management Limited
53 Threadneedle Street
London EC2R 8AR
Tel: 020 7448 8600
Fax: 020 7448 8601
enquiries@montanaro.co.uk
www.montanaro.co.uk
ADMINISTRATOR
Juniper Partners Limited
28 Walker Street
Edinburgh EH3 7HR
Tel: 0131 378 0500
COMPANY SECRETARY
Juniper Partners Limited
28 Walker Street
Edinburgh EH3 7HR
Tel: 0131 378 0500
Email: cosec@junipartners.com
REGISTERED OFFICE
28 Walker Street
Edinburgh EH3 7HR
REGISTRAR
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Registrar’s Shareholder Helpline
Tel: +44 (0)371 384 2030*
Registrar’s Broker Helpline
Tel: 0906 559 6025
* Lines are open 8.30am to 5.30pm, Monday to Friday.
STOCKBROKER
Cavendish Financials Plc
One Bartholomew Close
London EC1A 7BL
DEPOSITARY
The Bank of New York Mellon
(International) Limited
One Canada Square
London E14 5AL
CUSTODIAN
Bank of New York Mellon SA/NV
One Canada Square
London E14 5AL
BANKERS
Ing Bank N.V., London Branch
60 London Wall
London EC2M 5TQ
INDEPENDENT AUDITORS
Pricewaterhousecoopers LLP
Atria One
144 Morrison Street
Edinburgh EH3 8EX
SOLICITOR
D
ickson Minto W.S.
16 Charlotte Square
Edinburgh EH2 4DF
Montanaro European Smaller Companies Trust plc
Registered in Scotland No. SC074677
An investment company as defined under Section 833
of the Companies Act 2006.
Advisers
Montanaro European Smaller Companies Trust plc
28 Walker Street
Edinburgh EH3 7HR
Tel: 020 7448 8600
Fax: 020 7448 8601
E-mail: enquiries@montanaro.co.uk
Website: www.montanaro.co.uk