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European Smaller Companies Trust PLC
Quarterly Report • Mar 10, 2023
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Quarterly Report
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The European Smaller Companies Trust PLC
Summary for the half-year ended 31 December 2022
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The European Smaller Companies Trust PLC
process (ECF).
TO BE UPDATED 201 Bishopsgate London EC2M 3AE
A N Name Number Road Town County Postcode
Portfolio information
Ten largest investments at 31 December 2022
Geographical area
Geographic exposure
As a percentage of the portfolio excluding cash
31 Dec 22 30 Jun 22 % %
31 Dec 22
22
30 Jun
Austria 3.0 2.9 Belgium 4.6 4.8 Denmark 2.7 2.4 Finland 3.8 4.6 France 15.0 14.1 Germany 16.5 17.1 Greece 2.6 2.0 Ireland 4.0 4.9 Italy 9.3 8.5 Malta 1.1 1.0 Netherlands 10.5 10.6 Norway 2.6 3.8 Portugal 0.9 1.9 Spain 5.1 6.0 Sweden 9.3 8.8 Switzerland 9.0 6.6
TKH Industrials Netherlands 23,023 3.0 Van Lanschot Kempen Financials Netherlands 21,437 2.8 DFDS Industrials Denmark 18,902 2.4 u-blox Technology Switzerland 14,029 1.8 BFF Bank Financials Italy 13,578 1.7 Mytilineos Industrials Greece 12,735 1.6 Verallia Industrials France 12,169 1.6 Ipsos Consumer Discretionary France 12,155 1.6 Mersen Industrials France 11,216 1.4 Credito Emiliano Financials Italy 10,730 1.4 10 largest 149,974 19.3
Valuation £'000
% of portfolio
Company Sector
Financial summary
Half-year ended 31 Dec 2022 (unaudited)
Capital return £'000
Investment income 6,746 – 6,746 7,946 25,231 Other income 1 – 1 – –
at fair value through profi t or loss – 61,176 61,176 (11,013) (185,662) Total income 6,747 61,176 67,923 (3,067) (160,431)
taxation (940) (8,377) (9,317) (8,608) (14,281)
total comprehensive income 5,807 52,799 58,606 (11,675) (174,712)
and diluted 1.45p 13.17p 14.62p (2.91p) (43.59p)
through profi t or loss 775,230 906,484 725,441 Current assets 3,481 3,383 6,997 Current liabilities (80,032) (89,321) (79,974) Net assets 698,679 820,546 652,464
share - basic and diluted 174.29p 204.69p 162.76p
The Company has declared an interim dividend of 1.45p per ordinary share (31 December 2021: 1.25p) payable on 28 April 2023 to members on the register as at 31 March 2023. The shares will trade ex-dividend
At 31 December 2022 there were 400,867,176 ordinary shares in issue (31 December 2021 and 30 June
31 Dec 2022 (unaudited) £'000
Total return £'000
Revenue return £'000
Half-year ended 31 Dec 2021 (unaudited)
Total return £'000
31 Dec 2021 (unaudited) £'000
Year ended 30 June 2022 (audited)
Total return £'000
30 June 2022 (audited) £'000
Extract from the Statement of Comprehensive Income
Gains/(losses) on investments held
Expenses, fi nance costs and
Profi t/(loss) for the period and
Return per ordinary share - basic
Extract from the Balance Sheet
Investments held at fair value
Net asset value per ordinary
Dividends
on 30 March 2023. Share capital
2022: 400,867,176).
Sector exposure
As a percentage of the portfolio excluding cash
31 Dec 22 30 Jun 22 % %
31
30Jun22
Dec 22
Industrials 37.1 34.1 Consumer Discretionary 23.0 22.5 Financials 14.9 13.1 Technology 10.4 12.0 Utilities 3.8 5.1 Consumer Staples 3.2 4.1 Energy 2.3 2.0 Basic Materials 2.1 2.1 Real Estate 1.5 1.2 Health Care 1.7 2.1 Telecommunications – 1.7 The European Smaller Companies Trust PLC
Investment Objective
The Company seeks capital growth by investing in smaller and medium sized companies which are quoted, domiciled, listed or have operations in Europe (ex UK).
Front cover:
The fi rst half of the fi nancial year ending 30 June 2023 saw the Company outperform the benchmark. This was principally driven by the ongoing multiple compression of the 'growth at any price' stocks that had performed so well in 2021 and a result of the market recognising that the cost of capital could not stay as low as seemed the case in a zero-interest rate world. The portfolio's exposure to more sensibly priced growth, value and self-help investment cases made it more resilient than
Likewise, German-listed manufacturer of gears for electric bicycles, hGears, suffered from input-cost infl ation and supply chain bottlenecks at its customers. We opened new positions in Swedish-listed climate control company, Munters, which is benefi ting from the structural growth in data centres and climate-controlled agriculture, and German manufacturer of semiconductor equipment, PVA TePla, the latter making the most of the need for furnaces in exciting new areas such as silicon carbide which is essential for the fast charging of electric
We exited our position in German bank Aareal after it was bid for by private equity. We also sold into bids for Finnish-listed building systems provider, Caverion; Finnish electronic-invoice software company Basware; French-listed automated home company, Somfy; and Dutch-listed dredging company Boskalis Westminster. The level of corporate activity showcases that even in a tricky stock market and uncertain economic environment, cash-generative undervalued businesses
The challenges the world faces in 2023 are not terribly different from those we faced in 2022: war in eastern Europe, high energy costs and infl ation. Europe has done a far better job of navigating these than many commentators have expected, but this has yet to be refl ected in valuation multiples. We believe that valuation disciplines will be an important part of this cycle as the market re-learns how to price the cost of capital. There is still a moderate component of the European smaller companies market that trades on multiples which are hard to reconcile to the fundamental cash generation capacity of these companies. We remain focused on pursuing investment ideas that can create a return on your capital by generating cash and delivering growth.
Ollie Beckett, Rory Stokes and Julia Scheufl er
vehicles.
can attract premium bids.
2 March 2023
The largest contributors to portfolio performance predominantly came from value stocks boosted by the underlying macroeconomic environment and some stock-specifi c successes. Industrials exposed to energy capital expenditure performed well such as Greek-listed conglomerate, Mytilineos, whose power generation business performed very strongly. Likewise, Norwegian Liquifi ed Natural Gas ('LNG') carrier FLEX LNG benefi ted from the market recognising the value of the vessels and the long-dated contracts the company has in place. Many of the fi nancial stocks that the Company has invested in did very well as the prospect of rising interest rates began to boost their very depressed valuations. Irish-listed Allied Irish Bank ('AIB'), German Commerzbank, Italian-listed BFF Bank and Credito Emiliano all performed very well. In other highlights, French-listed Ipsos continued its rerating as the new management team has continued to improve governance and market communication.
Detractors from performance follow a less consistent pattern, although they have invariably been due to failure to deliver on expectations, poor management of the infl ationary environment or pause for breath after strong performance. German-listed battery equipment manufacturer Manz did poorly, having let expectations become too optimistic and suffered as a large client (Britishvolt) went into administration. German-listed online meal box provider HelloFresh was a drag on performance as it gave up some of the premium rating it attained during the pandemic and as it suffered from
rising customer acquisition costs.
the benchmark.
Performance
Total return performance for the six months to 31 December 2022
Benchmark
6.0%
Total return performance
162.76p
174.29p
NAV
9.3%
Average sector3
NAV per share 31 Dec 2022
30 June 2022
Average sector3
(including dividends reinvested and excluding transaction costs)
1 Net asset value ('NAV') per ordinary share total return
4 Share price total return using mid-market closing price Source: Morningstar Direct, Refi nitive Datastream
6 months %
2 The benchmark index is the MSCI Europe ex UK Small Cap Index expressed in sterling
3 The sector is the Association of Investment Companies ('AIC') European Smaller Companies sector
1 year %
Share price 31 Dec 2022
30 June 2022
140.00p
NAV 6.6 -23.7 20.4 28.5 219.8
share price 8.1 -26.8 16.9 21.2 236.5
NAV¹ 9.3 -12.5 37.0 29.6 289.4 Benchmark index² 6.0 -15.7 15.6 21.8 192.6
Share price4 8.2 -14.7 32.1 10.8 325.9
3 years %
148.00p
5 years %
Share price
8.2%
10 years %
price total return of 8.1%. Interim dividend
Discount management
to the clean energy transition.
out of favour; and
Over the six months to 31 December 2022, the Company's shares traded at an average discount of 15.2%. This can be attributed to two things:
• Europe, as an investment region, continues to be
• nervousness around small caps, despite our underlying holdings having strong balance sheets and European smaller companies being central
Europe proved to be resilient over the six months to 31 December 2022. The Eurozone economy continued to grow in the third quarter of 2022, driven by the post-pandemic revival of tourism and decisive action taken on energy. The demand for gas was lower than it had been over the two previous years due to an unseasonably warm winter and a concrete effort across the bloc to reduce demand. As a result, gas storage levels reached 95% in November, making shortages and a deeper recession less likely. However, the labour market has remained unaffected by recession fears so far and may prevent infl ation from falling as quickly as expected. Despite the uncertain market backdrop, the Company's NAV total return for the period was 9.3%, outperforming the benchmark return of 6.0%. The share price total return was 8.2%, compared to the average sector share
Performance highlights Chairman's Statement Fund Manager's Report
The Board regularly monitors the discount level and evaluates the appropriateness of buying back shares when we believe this level is not indicative of the sector. At close of business on 1 March 2023, the discount stood at 14.5%. We have not deemed it benefi cial to repurchase shares in the six months to 31 December 2022 or in the
The outlook remains uncertain due to the ongoing confl ict in eastern Europe and high and volatile energy prices. Ukraine has confounded many of her sceptics and delivered a series of battlefi eld successes while demonstrating the impressive coherence of the Western Alliance and the EU. The cost of enduring confl ict is tragic in human terms and has broader repercussions for ongoing expensive energy. However, there are reasons for optimism. The dramatic response in Europe, both from a demand reduction and a supply creation perspective, has muted the worst of the impact on the markets in which we invest. The supply chain issues which many corporates faced are now clearing, which should help drive recovery and dampen infl ation's bigger impacts. In addition, the end of China's 'zero covid' policy should further help improve the fl ow of global trade in due course. We believe that infl ation has peaked, but will be a bit more persistent than we were accustomed to prior to the pandemic. The requirement to diversify energy sources, drive the green transition and build better resilience into supply chains will require a revival of capital expenditure. European smaller companies are well placed to benefi t from this investment. We would like to caution that policy risk has shifted after being accommodative for most of the pandemic. If the European Central Bank continues with its stated plan, there is a risk that monetary policy will become too restrictive as the short-term infl ationary effects of the pandemic begin to clear. As a result, the market may experience bouts of volatility as we see things settle. We believe that a structurally higher interest rate environment will change the attitude of market valuation – the 'growth at any price' trend of recent years will end and the market will be more selective in rewarding businesses that generate cash. This aligns with our Fund Manager's approach of disciplined valuation which has worked to
period up to the date of this report.
maximize returns for our shareholders.
Christopher Casey Chairman 2 March 2023
Outlook
The Board is pleased to declare an interim dividend of 1.45p (2021: 1.25p) per ordinary share for the year ending June 2023. This is a 16.0% increase on the interim dividend paid last year and will be paid on 28 April 2023 to shareholders on the register at 31 March 2023. We remain confi dent that the Company will be able to deliver progressive dividend growth as the underlying portfolio companies continue to generate healthy cash fl ows. We may, however, not achieve the signifi cant growth of recent years, particularly if the economy improves, as it is likely to lead our Fund Manager to put greater emphasis on capital growth rather than income.
Cork production line
Corticeira Amorim Percentage of portfolio: 0.9% Geographical area: Portugal Cork manufacturers engaged in the research, development and promotion of products and new solutions for the cork industry.
This report contains material extracted from the unaudited half-year results of the Company for the six months ended 31 December 2022. The unabridged results for the half-year are available on the Company's website:
www.europeansmallercompaniestrust.com
Performance highlights Chairman's Statement Fund Manager's Report
Investment Objective
The European Smaller Companies Trust PLC
The Company seeks capital growth
by investing in smaller and medium
sized companies which are quoted,
domiciled, listed or have operations
in Europe (ex UK).
This report contains material extracted from the unaudited half-year results of the Company for the six months ended 31 December 2022. The unabridged results for the half-year are available on the Company's website:
Front cover:
Cork production line
Corticeira Amorim Percentage of portfolio: 0.9% Geographical area: Portugal Cork manufacturers engaged in the research, development and promotion of products and new solutions for the cork industry.
www.europeansmallercompaniestrust.com
Total return performance for the six months to 31 December 2022
Performance
price total return of 8.1%. Interim dividend
Discount management
to the clean energy transition.
out of favour; and
Over the six months to 31 December 2022, the Company's shares traded at an average discount of 15.2%. This can be attributed to two things:
• Europe, as an investment region, continues to be
• nervousness around small caps, despite our underlying holdings having strong balance sheets and European smaller companies being central
Europe proved to be resilient over the six months to 31 December 2022. The Eurozone economy continued to grow in the third quarter of 2022, driven by the post-pandemic revival of tourism and decisive action taken on energy. The demand for gas was lower than it had been over the two previous years due to an unseasonably warm winter and a concrete effort across the bloc to reduce demand. As a result, gas storage levels reached 95% in November, making shortages and a deeper recession less likely. However, the labour market has remained unaffected by recession fears so far and may prevent infl ation from falling as quickly as expected. Despite the uncertain market backdrop, the Company's NAV total return for the period was 9.3%, outperforming the benchmark return of 6.0%. The share price total return was 8.2%, compared to the average sector share
The Board regularly monitors the discount level and evaluates the appropriateness of buying back shares when we believe this level is not indicative of the sector. At close of business on 1 March 2023, the discount stood at 14.5%. We have not deemed it benefi cial to repurchase shares in the six months to 31 December 2022 or in the
The outlook remains uncertain due to the ongoing confl ict in eastern Europe and high and volatile energy prices. Ukraine has confounded many of her sceptics and delivered a series of battlefi eld successes while demonstrating the impressive coherence of the Western Alliance and the EU. The cost of enduring confl ict is tragic in human terms and has broader repercussions for ongoing expensive energy. However, there are reasons for optimism. The dramatic response in Europe, both from a demand reduction and a supply creation perspective, has muted the worst of the impact on the markets in which we invest. The supply chain issues which many corporates faced are now clearing, which should help drive recovery and dampen infl ation's bigger impacts. In addition, the end of China's 'zero covid' policy should further help improve the fl ow of global trade in due course. We believe that infl ation has peaked, but will be a bit more persistent than we were accustomed to prior to the pandemic. The requirement to diversify energy sources, drive the green transition and build better resilience into supply chains will require a revival of capital expenditure. European smaller companies are well placed to benefi t from this investment. We would like to caution that policy risk has shifted after being accommodative for most of the pandemic. If the European Central Bank continues with its stated plan, there is a risk that monetary policy will become too restrictive as the short-term infl ationary effects of the pandemic begin to clear. As a result, the market may experience bouts of volatility as we see things settle. We believe that a structurally higher interest rate environment will change the attitude of market valuation – the 'growth at any price' trend of recent years will end and the market will be more selective in rewarding businesses that generate cash. This aligns with our Fund Manager's approach of disciplined valuation which has worked to
period up to the date of this report.
maximize returns for our shareholders.
Christopher Casey Chairman 2 March 2023
Outlook
The Board is pleased to declare an interim dividend of 1.45p (2021: 1.25p) per ordinary share for the year ending June 2023. This is a 16.0% increase on the interim dividend paid last year and will be paid on 28 April 2023 to shareholders on the register at 31 March 2023. We remain confi dent that the Company will be able to deliver progressive dividend growth as the underlying portfolio companies continue to generate healthy cash fl ows. We may, however, not achieve the signifi cant growth of recent years, particularly if the economy improves, as it is likely to lead our Fund Manager to put greater emphasis on capital growth rather than income.
The fi rst half of the fi nancial year ending 30 June 2023 saw the Company outperform the benchmark. This was principally driven by the ongoing multiple compression of the 'growth at any price' stocks that had performed so well in 2021 and a result of the market recognising that the cost of capital could not stay as low as seemed the case in a zero-interest rate world. The portfolio's exposure to more sensibly priced growth, value and self-help investment cases made it more resilient than
Likewise, German-listed manufacturer of gears for electric bicycles, hGears, suffered from input-cost infl ation and supply chain bottlenecks at its customers. We opened new positions in Swedish-listed climate control company, Munters, which is benefi ting from the structural growth in data centres and climate-controlled agriculture, and German manufacturer of semiconductor equipment, PVA TePla, the latter making the most of the need for furnaces in exciting new areas such as silicon carbide which is essential for the fast charging of electric
We exited our position in German bank Aareal after it was bid for by private equity. We also sold into bids for Finnish-listed building systems provider, Caverion; Finnish electronic-invoice software company Basware; French-listed automated home company, Somfy; and Dutch-listed dredging company Boskalis Westminster. The level of corporate activity showcases that even in a tricky stock market and uncertain economic environment, cash-generative undervalued businesses
The challenges the world faces in 2023 are not terribly different from those we faced in 2022: war in eastern Europe, high energy costs and infl ation. Europe has done a far better job of navigating these than many commentators have expected, but this has yet to be refl ected in valuation multiples. We believe that valuation disciplines will be an important part of this cycle as the market re-learns how to price the cost of capital. There is still a moderate component of the European smaller companies market that trades on multiples which are hard to reconcile to the fundamental cash generation capacity of these companies. We remain focused on pursuing investment ideas that can create a return on your capital by generating cash and delivering growth.
Ollie Beckett, Rory Stokes and Julia Scheufl er
vehicles.
can attract premium bids.
2 March 2023
The largest contributors to portfolio performance predominantly came from value stocks boosted by the underlying macroeconomic environment and some stock-specifi c successes. Industrials exposed to energy capital expenditure performed well such as Greek-listed conglomerate, Mytilineos, whose power generation business performed very strongly. Likewise, Norwegian Liquifi ed Natural Gas ('LNG') carrier FLEX LNG benefi ted from the market recognising the value of the vessels and the long-dated contracts the company has in place. Many of the fi nancial stocks that the Company has invested in did very well as the prospect of rising interest rates began to boost their very depressed valuations. Irish-listed Allied Irish Bank ('AIB'), German Commerzbank, Italian-listed BFF Bank and Credito Emiliano all performed very well. In other highlights, French-listed Ipsos continued its rerating as the new management team has continued to improve governance and market communication.
Detractors from performance follow a less consistent pattern, although they have invariably been due to failure to deliver on expectations, poor management of the infl ationary environment or pause for breath after strong performance. German-listed battery equipment manufacturer Manz did poorly, having let expectations become too optimistic and suffered as a large client (Britishvolt) went into administration. German-listed online meal box provider HelloFresh was a drag on performance as it gave up some of the premium rating it attained during the pandemic and as it suffered from
rising customer acquisition costs.
the benchmark.
Total return performance
(including dividends reinvested and excluding transaction costs)
| 6 months % |
1 year % |
3 years % |
5 years % |
10 years % |
|
|---|---|---|---|---|---|
| NAV¹ | 9.3 | -12.5 | 37.0 | 29.6 | 289.4 |
| Benchmark index² | 6.0 | -15.7 | 15.6 | 21.8 | 192.6 |
| Average sector3 NAV |
6.6 | -23.7 | 20.4 | 28.5 | 219.8 |
| Share price4 | 8.2 | -14.7 | 32.1 | 10.8 | 325.9 |
| Average sector3 share price |
8.1 | -26.8 | 16.9 | 21.2 | 236.5 |
1 Net asset value ('NAV') per ordinary share total return
2 The benchmark index is the MSCI Europe ex UK Small Cap Index expressed in sterling
3 The sector is the Association of Investment Companies ('AIC') European Smaller Companies sector
4 Share price total return using mid-market closing price
Source: Morningstar Direct, Refi nitive Datastream
Performance highlights Chairman's Statement Fund Manager's Report
Performance
Total return performance for the six months to 31 December 2022
Benchmark
6.0%
Total return performance
162.76p
174.29p
NAV
9.3%
Average sector3
NAV per share 31 Dec 2022
30 June 2022
Average sector3
(including dividends reinvested and excluding transaction costs)
1 Net asset value ('NAV') per ordinary share total return
4 Share price total return using mid-market closing price Source: Morningstar Direct, Refi nitive Datastream
6 months %
2 The benchmark index is the MSCI Europe ex UK Small Cap Index expressed in sterling
3 The sector is the Association of Investment Companies ('AIC') European Smaller Companies sector
1 year %
Share price 31 Dec 2022
30 June 2022
140.00p
NAV 6.6 -23.7 20.4 28.5 219.8
share price 8.1 -26.8 16.9 21.2 236.5
NAV¹ 9.3 -12.5 37.0 29.6 289.4 Benchmark index² 6.0 -15.7 15.6 21.8 192.6
Share price4 8.2 -14.7 32.1 10.8 325.9
3 years %
148.00p
5 years %
Share price
8.2%
10 years %
Investment Objective
The European Smaller Companies Trust PLC
The Company seeks capital growth
by investing in smaller and medium
sized companies which are quoted,
domiciled, listed or have operations
in Europe (ex UK).
This report contains material extracted from the unaudited half-year results of the Company for the six months ended 31 December 2022. The unabridged results for the half-year are available on the Company's website:
Front cover:
Cork production line
Corticeira Amorim Percentage of portfolio: 0.9% Geographical area: Portugal Cork manufacturers engaged in the research, development and promotion of products and new solutions for the cork industry.
www.europeansmallercompaniestrust.com
Europe proved to be resilient over the six months to 31 December 2022. The Eurozone economy continued to grow in the third quarter of 2022, driven by the post-pandemic revival of tourism and decisive action taken on energy. The demand for gas was lower than it had been over the two previous years due to an unseasonably warm winter and a concrete effort across the bloc to reduce demand. As a result, gas storage levels reached 95% in November, making shortages and a deeper recession less likely. However, the labour market has remained unaffected by recession fears so far and may prevent infl ation from falling as quickly as expected.
Despite the uncertain market backdrop, the Company's NAV total return for the period was 9.3%, outperforming the benchmark return of 6.0%. The share price total return was 8.2%, compared to the average sector share price total return of 8.1%.
Interim dividend
The Board is pleased to declare an interim dividend of 1.45p (2021: 1.25p) per ordinary share for the year ending June 2023. This is a 16.0% increase on the interim dividend paid last year and will be paid on 28 April 2023 to shareholders on the register at 31 March 2023.
We remain confi dent that the Company will be able to deliver progressive dividend growth as the underlying portfolio companies continue to generate healthy cash fl ows. We may, however, not achieve the signifi cant growth of recent years, particularly if the economy improves, as it is likely to lead our Fund Manager to put greater emphasis on capital growth rather than income.
Discount management
Over the six months to 31 December 2022, the Company's shares traded at an average discount of 15.2%. This can be attributed to two things:
- Europe, as an investment region, continues to be out of favour; and
- nervousness around small caps, despite our underlying holdings having strong balance sheets and European smaller companies being central to the clean energy transition.
The Board regularly monitors the discount level and evaluates the appropriateness of buying back shares when we believe this level is not indicative of the sector. At close of business on 1 March 2023, the discount stood at 14.5%. We have not deemed it benefi cial to repurchase shares in the six months to 31 December 2022 or in the period up to the date of this report.
The fi rst half of the fi nancial year ending 30 June 2023 saw the Company outperform the benchmark. This was principally driven by the ongoing multiple compression of the 'growth at any price' stocks that had performed so well in 2021 and a result of the market recognising that the cost of capital could not stay as low as seemed the case in a zero-interest rate world. The portfolio's exposure to more sensibly priced growth, value and self-help investment cases made it more resilient than
Likewise, German-listed manufacturer of gears for electric bicycles, hGears, suffered from input-cost infl ation and supply chain bottlenecks at its customers. We opened new positions in Swedish-listed climate control company, Munters, which is benefi ting from the structural growth in data centres and climate-controlled agriculture, and German manufacturer of semiconductor equipment, PVA TePla, the latter making the most of the need for furnaces in exciting new areas such as silicon carbide which is essential for the fast charging of electric
We exited our position in German bank Aareal after it was bid for by private equity. We also sold into bids for Finnish-listed building systems provider, Caverion; Finnish electronic-invoice software company Basware; French-listed automated home company, Somfy; and Dutch-listed dredging company Boskalis Westminster. The level of corporate activity showcases that even in a tricky stock market and uncertain economic environment, cash-generative undervalued businesses
The challenges the world faces in 2023 are not terribly different from those we faced in 2022: war in eastern Europe, high energy costs and infl ation. Europe has done a far better job of navigating these than many commentators have expected, but this has yet to be refl ected in valuation multiples. We believe that valuation disciplines will be an important part of this cycle as the market re-learns how to price the cost of capital. There is still a moderate component of the European smaller companies market that trades on multiples which are hard to reconcile to the fundamental cash generation capacity of these companies. We remain focused on pursuing investment ideas that can create a return on your capital by generating cash and delivering growth.
Ollie Beckett, Rory Stokes and Julia Scheufl er
vehicles.
can attract premium bids.
2 March 2023
The largest contributors to portfolio performance predominantly came from value stocks boosted by the underlying macroeconomic environment and some stock-specifi c successes. Industrials exposed to energy capital expenditure performed well such as Greek-listed conglomerate, Mytilineos, whose power generation business performed very strongly. Likewise, Norwegian Liquifi ed Natural Gas ('LNG') carrier FLEX LNG benefi ted from the market recognising the value of the vessels and the long-dated contracts the company has in place. Many of the fi nancial stocks that the Company has invested in did very well as the prospect of rising interest rates began to boost their very depressed valuations. Irish-listed Allied Irish Bank ('AIB'), German Commerzbank, Italian-listed BFF Bank and Credito Emiliano all performed very well. In other highlights, French-listed Ipsos continued its rerating as the new management team has continued to improve governance and market communication.
Detractors from performance follow a less consistent pattern, although they have invariably been due to failure to deliver on expectations, poor management of the infl ationary environment or pause for breath after strong performance. German-listed battery equipment manufacturer Manz did poorly, having let expectations become too optimistic and suffered as a large client (Britishvolt) went into administration. German-listed online meal box provider HelloFresh was a drag on performance as it gave up some of the premium rating it attained during the pandemic and as it suffered from
rising customer acquisition costs.
the benchmark.
Outlook
The outlook remains uncertain due to the ongoing confl ict in eastern Europe and high and volatile energy prices. Ukraine has confounded many of her sceptics and delivered a series of battlefi eld successes while demonstrating the impressive coherence of the Western Alliance and the EU. The cost of enduring confl ict is tragic in human terms and has broader repercussions for ongoing expensive energy. However, there are reasons for optimism. The dramatic response in Europe, both from a demand reduction and a supply creation perspective, has muted the worst of the impact on the markets in which we invest. The supply chain issues which many corporates faced are now clearing, which should help drive recovery and dampen infl ation's bigger impacts. In addition, the end of China's 'zero covid' policy should further help improve the fl ow of global trade in due course. We believe that infl ation has peaked, but will be a bit more persistent than we were accustomed to prior to the pandemic. The requirement to diversify energy sources, drive the green transition and build better resilience into supply chains will require a revival of capital expenditure. European smaller companies are well placed to benefi t from this investment.
We would like to caution that policy risk has shifted after being accommodative for most of the pandemic. If the European Central Bank continues with its stated plan, there is a risk that monetary policy will become too restrictive as the short-term infl ationary effects of the pandemic begin to clear. As a result, the market may experience bouts of volatility as we see things settle. We believe that a structurally higher interest rate environment will change the attitude of market valuation – the 'growth at any price' trend of recent years will end and the market will be more selective in rewarding businesses that generate cash. This aligns with our Fund Manager's approach of disciplined valuation which has worked to maximize returns for our shareholders.
Christopher Casey Chairman 2 March 2023
Performance highlights Chairman's Statement Fund Manager's Report
The fi rst half of the fi nancial year ending 30 June 2023 saw the Company outperform the benchmark. This was principally driven by the ongoing multiple compression of the 'growth at any price' stocks that had performed so well in 2021 and a result of the market recognising that the cost of capital could not stay as low as seemed the case in a zero-interest rate world. The portfolio's exposure to more sensibly priced growth, value and self-help investment cases made it more resilient than the benchmark.
Performance
Total return performance for the six months to 31 December 2022
Benchmark
6.0%
Total return performance
162.76p
174.29p
NAV
9.3%
Average sector3
NAV per share 31 Dec 2022
30 June 2022
Average sector3
(including dividends reinvested and excluding transaction costs)
1 Net asset value ('NAV') per ordinary share total return
4 Share price total return using mid-market closing price Source: Morningstar Direct, Refi nitive Datastream
6 months %
2 The benchmark index is the MSCI Europe ex UK Small Cap Index expressed in sterling
3 The sector is the Association of Investment Companies ('AIC') European Smaller Companies sector
1 year %
Share price 31 Dec 2022
30 June 2022
140.00p
NAV 6.6 -23.7 20.4 28.5 219.8
share price 8.1 -26.8 16.9 21.2 236.5
NAV¹ 9.3 -12.5 37.0 29.6 289.4 Benchmark index² 6.0 -15.7 15.6 21.8 192.6
Share price4 8.2 -14.7 32.1 10.8 325.9
3 years %
148.00p
5 years %
Share price
8.2%
10 years %
Investment Objective
The European Smaller Companies Trust PLC
The Company seeks capital growth
by investing in smaller and medium
sized companies which are quoted,
domiciled, listed or have operations
in Europe (ex UK).
This report contains material extracted from the unaudited half-year results of the Company for the six months ended 31 December 2022. The unabridged results for the half-year are available on the Company's website:
Front cover:
Cork production line
Corticeira Amorim Percentage of portfolio: 0.9% Geographical area: Portugal Cork manufacturers engaged in the research, development and promotion of products and new solutions for the cork industry.
www.europeansmallercompaniestrust.com
price total return of 8.1%. Interim dividend
Discount management
to the clean energy transition.
out of favour; and
Over the six months to 31 December 2022, the Company's shares traded at an average discount of 15.2%. This can be attributed to two things:
• Europe, as an investment region, continues to be
• nervousness around small caps, despite our underlying holdings having strong balance sheets and European smaller companies being central
Europe proved to be resilient over the six months to 31 December 2022. The Eurozone economy continued to grow in the third quarter of 2022, driven by the post-pandemic revival of tourism and decisive action taken on energy. The demand for gas was lower than it had been over the two previous years due to an unseasonably warm winter and a concrete effort across the bloc to reduce demand. As a result, gas storage levels reached 95% in November, making shortages and a deeper recession less likely. However, the labour market has remained unaffected by recession fears so far and may prevent infl ation from falling as quickly as expected. Despite the uncertain market backdrop, the Company's NAV total return for the period was 9.3%, outperforming the benchmark return of 6.0%. The share price total return was 8.2%, compared to the average sector share
The Board regularly monitors the discount level and evaluates the appropriateness of buying back shares when we believe this level is not indicative of the sector. At close of business on 1 March 2023, the discount stood at 14.5%. We have not deemed it benefi cial to repurchase shares in the six months to 31 December 2022 or in the
The outlook remains uncertain due to the ongoing confl ict in eastern Europe and high and volatile energy prices. Ukraine has confounded many of her sceptics and delivered a series of battlefi eld successes while demonstrating the impressive coherence of the Western Alliance and the EU. The cost of enduring confl ict is tragic in human terms and has broader repercussions for ongoing expensive energy. However, there are reasons for optimism. The dramatic response in Europe, both from a demand reduction and a supply creation perspective, has muted the worst of the impact on the markets in which we invest. The supply chain issues which many corporates faced are now clearing, which should help drive recovery and dampen infl ation's bigger impacts. In addition, the end of China's 'zero covid' policy should further help improve the fl ow of global trade in due course. We believe that infl ation has peaked, but will be a bit more persistent than we were accustomed to prior to the pandemic. The requirement to diversify energy sources, drive the green transition and build better resilience into supply chains will require a revival of capital expenditure. European smaller companies are well placed to benefi t from this investment. We would like to caution that policy risk has shifted after being accommodative for most of the pandemic. If the European Central Bank continues with its stated plan, there is a risk that monetary policy will become too restrictive as the short-term infl ationary effects of the pandemic begin to clear. As a result, the market may experience bouts of volatility as we see things settle. We believe that a structurally higher interest rate environment will change the attitude of market valuation – the 'growth at any price' trend of recent years will end and the market will be more selective in rewarding businesses that generate cash. This aligns with our Fund Manager's approach of disciplined valuation which has worked to
period up to the date of this report.
maximize returns for our shareholders.
Christopher Casey Chairman 2 March 2023
Outlook
The Board is pleased to declare an interim dividend of 1.45p (2021: 1.25p) per ordinary share for the year ending June 2023. This is a 16.0% increase on the interim dividend paid last year and will be paid on 28 April 2023 to shareholders on the register at 31 March 2023. We remain confi dent that the Company will be able to deliver progressive dividend growth as the underlying portfolio companies continue to generate healthy cash fl ows. We may, however, not achieve the signifi cant growth of recent years, particularly if the economy improves, as it is likely to lead our Fund Manager to put greater emphasis on capital growth rather than income.
The largest contributors to portfolio performance predominantly came from value stocks boosted by the underlying macroeconomic environment and some stock-specifi c successes. Industrials exposed to energy capital expenditure performed well such as Greek-listed conglomerate, Mytilineos, whose power generation business performed very strongly. Likewise, Norwegian Liquifi ed Natural Gas ('LNG') carrier FLEX LNG benefi ted from the market recognising the value of the vessels and the long-dated contracts the company has in place. Many of the fi nancial stocks that the Company has invested in did very well as the prospect of rising interest rates began to boost their very depressed valuations. Irish-listed Allied Irish Bank ('AIB'), German Commerzbank, Italian-listed BFF Bank and Credito Emiliano all performed very well. In other highlights, French-listed Ipsos continued its rerating as the new management team has continued to improve governance and market communication.
Detractors from performance follow a less consistent pattern, although they have invariably been due to failure to deliver on expectations, poor management of the infl ationary environment or pause for breath after strong performance. German-listed battery equipment manufacturer Manz did poorly, having let expectations become too optimistic and suffered as a large client (Britishvolt) went into administration. German-listed online meal box provider HelloFresh was a drag on performance as it gave up some of the premium rating it attained during the pandemic and as it suffered from rising customer acquisition costs.
Likewise, German-listed manufacturer of gears for electric bicycles, hGears, suffered from input-cost infl ation and supply chain bottlenecks at its customers.
We opened new positions in Swedish-listed climate control company, Munters, which is benefi ting from the structural growth in data centres and climate-controlled agriculture, and German manufacturer of semiconductor equipment, PVA TePla, the latter making the most of the need for furnaces in exciting new areas such as silicon carbide which is essential for the fast charging of electric vehicles.
We exited our position in German bank Aareal after it was bid for by private equity. We also sold into bids for Finnish-listed building systems provider, Caverion; Finnish electronic-invoice software company Basware; French-listed automated home company, Somfy; and Dutch-listed dredging company Boskalis Westminster. The level of corporate activity showcases that even in a tricky stock market and uncertain economic environment, cash-generative undervalued businesses can attract premium bids.
The challenges the world faces in 2023 are not terribly different from those we faced in 2022: war in eastern Europe, high energy costs and infl ation. Europe has done a far better job of navigating these than many commentators have expected, but this has yet to be refl ected in valuation multiples. We believe that valuation disciplines will be an important part of this cycle as the market re-learns how to price the cost of capital. There is still a moderate component of the European smaller companies market that trades on multiples which are hard to reconcile to the fundamental cash generation capacity of these companies. We remain focused on pursuing investment ideas that can create a return on your capital by generating cash and delivering growth.
Ollie Beckett, Rory Stokes and Julia Scheufl er 2 March 2023
Financial summary
| Half-year ended 31 Dec 2022 (unaudited) |
Half-year ended 31 Dec 2021 (unaudited) |
Year ended 30 June 2022 (audited) |
|||
|---|---|---|---|---|---|
| Extract from the Statement of Comprehensive Income |
Revenue return £'000 |
Capital return £'000 |
Total return £'000 |
Total return £'000 |
Total return £'000 |
| Investment income | 6,746 | – | 6,746 | 7,946 | 25,231 |
| Other income | 1 | – | 1 | – | – |
| Gains/(losses) on investments held at fair value through profi t or loss |
– | 61,176 | 61,176 | (11,013) | (185,662) |
| Total income | 6,747 | 61,176 | 67,923 | (3,067) | (160,431) |
| Expenses, fi nance costs and taxation |
(940) | (8,377) | (9,317) | (8,608) | (14,281) |
| Profi t/(loss) for the period and total comprehensive income |
5,807 | 52,799 | 58,606 | (11,675) | (174,712) |
| Return per ordinary share - basic and diluted |
1.45p | 13.17p | 14.62p | (2.91p) | (43.59p) |
Portfolio information
Ten largest investments at 31 December 2022
Geographical area
Geographic exposure
As a percentage of the portfolio excluding cash
31 Dec 22 30 Jun 22 % %
31 Dec 22
22
30 Jun
Austria 3.0 2.9 Belgium 4.6 4.8 Denmark 2.7 2.4 Finland 3.8 4.6 France 15.0 14.1 Germany 16.5 17.1 Greece 2.6 2.0 Ireland 4.0 4.9 Italy 9.3 8.5 Malta 1.1 1.0 Netherlands 10.5 10.6 Norway 2.6 3.8 Portugal 0.9 1.9 Spain 5.1 6.0 Sweden 9.3 8.8 Switzerland 9.0 6.6
TKH Industrials Netherlands 23,023 3.0 Van Lanschot Kempen Financials Netherlands 21,437 2.8 DFDS Industrials Denmark 18,902 2.4 u-blox Technology Switzerland 14,029 1.8 BFF Bank Financials Italy 13,578 1.7 Mytilineos Industrials Greece 12,735 1.6 Verallia Industrials France 12,169 1.6 Ipsos Consumer Discretionary France 12,155 1.6 Mersen Industrials France 11,216 1.4 Credito Emiliano Financials Italy 10,730 1.4 10 largest 149,974 19.3
Valuation £'000
% of portfolio
Company Sector
Sector exposure
As a percentage of the portfolio excluding cash
31 Dec 22 30 Jun 22 % %
31
30Jun22
Dec 22
Industrials 37.1 34.1 Consumer Discretionary 23.0 22.5 Financials 14.9 13.1 Technology 10.4 12.0 Utilities 3.8 5.1 Consumer Staples 3.2 4.1 Energy 2.3 2.0 Basic Materials 2.1 2.1 Real Estate 1.5 1.2 Health Care 1.7 2.1 Telecommunications – 1.7
| Extract from the Balance Sheet | 31 Dec 2022 (unaudited) £'000 |
31 Dec 2021 (unaudited) £'000 |
30 June 2022 (audited) £'000 |
|---|---|---|---|
| Investments held at fair value through profi t or loss |
775,230 | 906,484 | 725,441 |
| Current assets | 3,481 | 3,383 | 6,997 |
| Current liabilities | (80,032) | (89,321) | (79,974) |
| Net assets | 698,679 | 820,546 | 652,464 |
| Net asset value per ordinary share - basic and diluted |
174.29p | 204.69p | 162.76p |
Dividends
The Company has declared an interim dividend of 1.45p per ordinary share (31 December 2021: 1.25p) payable on 28 April 2023 to members on the register as at 31 March 2023. The shares will trade ex-dividend on 30 March 2023.
Share capital
At 31 December 2022 there were 400,867,176 ordinary shares in issue (31 December 2021 and 30 June 2022: 400,867,176).
This report is printed on Revive silk 100% recycled, contains 100% recycled waste and is manufactured at a mill certifi ed with ISO 14001 environmental management standard. The pulp used in this product is bleached using an Elemental Chlorine Free
The European
Summary for the half-year ended
Companies
31 December 2022
Trust PLC
Smaller
Printed by Leycol JHI 9227/1222
If undelivered please return to the above address
The European Smaller Companies Trust PLC
process (ECF).
TO BE UPDATED 201 Bishopsgate London EC2M 3AE
A N Name Number Road Town County Postcode
Portfolio information Portfolio information
Ten largest investments at 31 December 2022 Ten largest investments at 31 December 2022
| Company Company |
Sector Sector |
Geographical Geographical area area |
Valuation Valuation £'000 £'000 |
% of % of portfolio portfolio |
|---|---|---|---|---|
| TKH | Industrials | Netherlands | 23,023 | 3.0 |
| TKH | Industrials | Netherlands | 23,023 | 3.0 |
| Van Lanschot Kempen | Financials | Netherlands | 21,437 | 2.8 |
| Van Lanschot Kempen | Financials | Netherlands | 21,437 | 2.8 |
| DFDS | Industrials | Denmark | 18,902 | 2.4 |
| DFDS | Industrials | Denmark | 18,902 | 2.4 |
| u-blox | Technology | Switzerland | 14,029 | 1.8 |
| u-blox | Technology | Switzerland | 14,029 | 1.8 |
| BFF Bank | Financials | Italy | 13,578 | 1.7 |
| BFF Bank | Financials | Italy | 13,578 | 1.7 |
| Mytilineos | Industrials | Greece | 12,735 | 1.6 |
| Mytilineos | Industrials | Greece | 12,735 | 1.6 |
| Verallia | Industrials | France | 12,169 | 1.6 |
| Verallia | Industrials | France | 12,169 | 1.6 |
| Ipsos | Consumer Discretionary | France | 12,155 | 1.6 |
| Ipsos | Consumer Discretionary | France | 12,155 | 1.6 |
| Mersen | Industrials | France | 11,216 | 1.4 |
| Mersen | Industrials | France | 11,216 | 1.4 |
| Credito Emiliano | Financials | Italy | 10,730 | 1.4 |
| Credito Emiliano | Financials | Italy | 10,730 | 1.4 |
| 10 largest 10 largest |
149,974 149,974 |
19.3 19.3 |
Sector exposure Sector exposure
Financial summary
Financial summary
Half-year ended 31 Dec 2022 (unaudited)
Half-year ended 31 Dec 2022 (unaudited)
Capital return £'000
Capital return £'000
Investment income 6,746 – 6,746 7,946 25,231 Other income 1 – 1 – –
Investment income 6,746 – 6,746 7,946 25,231 Other income 1 – 1 – –
at fair value through profi t or loss – 61,176 61,176 (11,013) (185,662) Total income 6,747 61,176 67,923 (3,067) (160,431)
at fair value through profi t or loss – 61,176 61,176 (11,013) (185,662) Total income 6,747 61,176 67,923 (3,067) (160,431)
taxation (940) (8,377) (9,317) (8,608) (14,281)
taxation (940) (8,377) (9,317) (8,608) (14,281)
total comprehensive income 5,807 52,799 58,606 (11,675) (174,712)
and diluted 1.45p 13.17p 14.62p (2.91p) (43.59p)
total comprehensive income 5,807 52,799 58,606 (11,675) (174,712)
and diluted 1.45p 13.17p 14.62p (2.91p) (43.59p)
through profi t or loss 775,230 906,484 725,441 Current assets 3,481 3,383 6,997 Current liabilities (80,032) (89,321) (79,974) Net assets 698,679 820,546 652,464
through profi t or loss 775,230 906,484 725,441 Current assets 3,481 3,383 6,997 Current liabilities (80,032) (89,321) (79,974) Net assets 698,679 820,546 652,464
share - basic and diluted 174.29p 204.69p 162.76p
share - basic and diluted 174.29p 204.69p 162.76p
The Company has declared an interim dividend of 1.45p per ordinary share (31 December 2021: 1.25p) payable on 28 April 2023 to members on the register as at 31 March 2023. The shares will trade ex-dividend
The Company has declared an interim dividend of 1.45p per ordinary share (31 December 2021: 1.25p) payable on 28 April 2023 to members on the register as at 31 March 2023. The shares will trade ex-dividend
At 31 December 2022 there were 400,867,176 ordinary shares in issue (31 December 2021 and 30 June
At 31 December 2022 there were 400,867,176 ordinary shares in issue (31 December 2021 and 30 June
31 Dec 2022 (unaudited) £'000
31 Dec 2022 (unaudited) £'000
Total return £'000
Total return £'000
Revenue return £'000
Revenue return £'000
Half-year ended 31 Dec 2021 (unaudited)
Half-year ended 31 Dec 2021 (unaudited)
Total return £'000
Total return £'000
31 Dec 2021 (unaudited) £'000
31 Dec 2021 (unaudited) £'000
Year ended 30 June 2022 (audited)
Year ended 30 June 2022 (audited)
Total return £'000
Total return £'000
30 June 2022 (audited) £'000
30 June 2022 (audited) £'000
Extract from the Statement of Comprehensive Income
Extract from the Statement of Comprehensive Income
Gains/(losses) on investments held
Gains/(losses) on investments held
Expenses, fi nance costs and
Profi t/(loss) for the period and
Profi t/(loss) for the period and
Expenses, fi nance costs and
Return per ordinary share - basic
Return per ordinary share - basic
Extract from the Balance Sheet
Investments held at fair value
Investments held at fair value
Extract from the Balance Sheet
Net asset value per ordinary
Net asset value per ordinary
Dividends
Dividends
on 30 March 2023. Share capital
on 30 March 2023. Share capital
2022: 400,867,176).
2022: 400,867,176).
As a percentage of the portfolio excluding cash As a percentage of the portfolio excluding cash
| 31 Dec 22 31 Dec 22 % % |
30 Jun 22 30 Jun 22 % % |
|
|---|---|---|
| Industrials | 37.1 | 34.1 |
| Industrials | 37.1 | 34.1 |
| Consumer Discretionary | 23.0 | 22.5 |
| Consumer Discretionary | 23.0 | 22.5 |
| Financials | 14.9 | 13.1 |
| Financials | 14.9 | 13.1 |
| Technology | 10.4 | 12.0 |
| Technology | 10.4 | 12.0 |
| Utilities | 3.8 | 5.1 |
| Utilities | 3.8 | 5.1 |
| Consumer Staples | 3.2 | 4.1 |
| Consumer Staples | 3.2 | 4.1 |
| Energy | 2.3 | 2.0 |
| Energy | 2.3 | 2.0 |
| Basic Materials | 2.1 | 2.1 |
| Basic Materials | 2.1 | 2.1 |
| Real Estate | 1.5 | 1.2 |
| Real Estate | 1.5 | 1.2 |
| Health Care | 1.7 | 2.1 |
| Health Care | 1.7 | 2.1 |
| Telecommunications | – | 1.7 |
| Telecommunications | – | 1.7 |
Geographic exposure Geographic exposure
As a percentage of the portfolio excluding cash As a percentage of the portfolio excluding cash
| 31 Dec 22 31 Dec 22 % % |
30 Jun 22 30 Jun 22 % % |
|
|---|---|---|
| Austria | 3.0 | 2.9 |
| Austria | 3.0 | 2.9 |
| Belgium | 4.6 | 4.8 |
| Belgium | 4.6 | 4.8 |
| Denmark | 2.7 | 2.4 |
| Denmark | 2.7 | 2.4 |
| Finland | 3.8 | 4.6 |
| Finland | 3.8 | 4.6 |
| France | 15.0 | 14.1 |
| France | 15.0 | 14.1 |
| Germany | 16.5 | 17.1 |
| Germany | 16.5 | 17.1 |
| Greece | 2.6 | 2.0 |
| Greece | 2.6 | 2.0 |
| Ireland | 4.0 | 4.9 |
| Ireland | 4.0 | 4.9 |
| Italy | 9.3 | 8.5 |
| Italy | 9.3 | 8.5 |
| Malta | 1.1 | 1.0 |
| Malta | 1.1 | 1.0 |
| Netherlands | 10.5 | 10.6 |
| Netherlands | 10.5 | 10.6 |
| Norway | 2.6 | 3.8 |
| Norway | 2.6 | 3.8 |
| Portugal | 0.9 | 1.9 |
| Portugal | 0.9 | 1.9 |
| Spain | 5.1 | 6.0 |
| Spain | 5.1 | 6.0 |
| Sweden | 9.3 | 8.8 |
| Sweden | 9.3 | 8.8 |
| Switzerland | 9.0 | 6.6 |
| Switzerland | 9.0 | 6.6 |
This report is printed on Revive silk 100% recycled, contains 100% recycled waste and is manufactured at a mill certifi ed with ISO 14001 environmental management standard. The pulp used in this product is bleached using an Elemental Chlorine Free
This report is printed on Revive silk 100% recycled, contains 100% recycled waste and is manufactured at a mill certifi ed with ISO 14001 environmental management standard. The pulp used in this product is bleached using an Elemental Chlorine Free The European
The European
Summary for the half-year ended
Summary for the half-year ended
Companies
Companies
31 December 2022
31 December 2022
Trust PLC
Trust PLC
Smaller
Smaller
Printed by Leycol JHI 9227/1222
Printed by Leycol JHI 9227/1222
If undelivered please return to the above address
If undelivered please return to the above address
The European Smaller Companies Trust PLC
The European Smaller Companies Trust PLC
process (ECF).
process (ECF).
TO BE UPDATED
TO BE UPDATED 201 Bishopsgate London EC2M 3AE
201 Bishopsgate London EC2M 3AE
A N Name Number Road Town County Postcode
A N Name Number Road Town County Postcode
The European
The European
Summary for the half-year ended
Summary for the half-year ended
Companies
Companies
31 December 2022
31 December 2022
Trust PLC
Trust PLC
Smaller
Smaller
A N Name Number Road Town County Postcode A N Name Number Road Town County Postcode
Portfolio information
Portfolio information
Ten largest investments at 31 December 2022
Ten largest investments at 31 December 2022
Geographical area
Geographical area
Geographic exposure
Geographic exposure
As a percentage of the portfolio excluding cash
As a percentage of the portfolio excluding cash
31 Dec 22 30 Jun 22 % %
31 Dec 22 30 Jun 22 % %
31 Dec 22
31 Dec 22
22
22
30 Jun
30 Jun
Austria 3.0 2.9 Belgium 4.6 4.8 Denmark 2.7 2.4 Finland 3.8 4.6 France 15.0 14.1 Germany 16.5 17.1 Greece 2.6 2.0 Ireland 4.0 4.9 Italy 9.3 8.5 Malta 1.1 1.0 Netherlands 10.5 10.6 Norway 2.6 3.8 Portugal 0.9 1.9 Spain 5.1 6.0 Sweden 9.3 8.8 Switzerland 9.0 6.6
Austria 3.0 2.9 Belgium 4.6 4.8 Denmark 2.7 2.4 Finland 3.8 4.6 France 15.0 14.1 Germany 16.5 17.1 Greece 2.6 2.0 Ireland 4.0 4.9 Italy 9.3 8.5 Malta 1.1 1.0 Netherlands 10.5 10.6 Norway 2.6 3.8 Portugal 0.9 1.9 Spain 5.1 6.0 Sweden 9.3 8.8 Switzerland 9.0 6.6
TKH Industrials Netherlands 23,023 3.0 Van Lanschot Kempen Financials Netherlands 21,437 2.8 DFDS Industrials Denmark 18,902 2.4 u-blox Technology Switzerland 14,029 1.8 BFF Bank Financials Italy 13,578 1.7 Mytilineos Industrials Greece 12,735 1.6 Verallia Industrials France 12,169 1.6 Ipsos Consumer Discretionary France 12,155 1.6 Mersen Industrials France 11,216 1.4 Credito Emiliano Financials Italy 10,730 1.4 10 largest 149,974 19.3
TKH Industrials Netherlands 23,023 3.0 Van Lanschot Kempen Financials Netherlands 21,437 2.8 DFDS Industrials Denmark 18,902 2.4 u-blox Technology Switzerland 14,029 1.8 BFF Bank Financials Italy 13,578 1.7 Mytilineos Industrials Greece 12,735 1.6 Verallia Industrials France 12,169 1.6 Ipsos Consumer Discretionary France 12,155 1.6 Mersen Industrials France 11,216 1.4 Credito Emiliano Financials Italy 10,730 1.4 10 largest 149,974 19.3
Valuation £'000
Valuation £'000
% of portfolio
% of portfolio
Company Sector
Company Sector
Financial summary
Financial summary
Half-year ended 31 Dec 2022 (unaudited)
Half-year ended 31 Dec 2022 (unaudited)
Capital return £'000
Capital return £'000
Investment income 6,746 – 6,746 7,946 25,231 Other income 1 – 1 – –
Investment income 6,746 – 6,746 7,946 25,231 Other income 1 – 1 – –
at fair value through profi t or loss – 61,176 61,176 (11,013) (185,662) Total income 6,747 61,176 67,923 (3,067) (160,431)
at fair value through profi t or loss – 61,176 61,176 (11,013) (185,662) Total income 6,747 61,176 67,923 (3,067) (160,431)
taxation (940) (8,377) (9,317) (8,608) (14,281)
taxation (940) (8,377) (9,317) (8,608) (14,281)
total comprehensive income 5,807 52,799 58,606 (11,675) (174,712)
total comprehensive income 5,807 52,799 58,606 (11,675) (174,712)
and diluted 1.45p 13.17p 14.62p (2.91p) (43.59p)
and diluted 1.45p 13.17p 14.62p (2.91p) (43.59p)
through profi t or loss 775,230 906,484 725,441 Current assets 3,481 3,383 6,997 Current liabilities (80,032) (89,321) (79,974) Net assets 698,679 820,546 652,464
through profi t or loss 775,230 906,484 725,441 Current assets 3,481 3,383 6,997 Current liabilities (80,032) (89,321) (79,974) Net assets 698,679 820,546 652,464
share - basic and diluted 174.29p 204.69p 162.76p
share - basic and diluted 174.29p 204.69p 162.76p
The Company has declared an interim dividend of 1.45p per ordinary share (31 December 2021: 1.25p) payable on 28 April 2023 to members on the register as at 31 March 2023. The shares will trade ex-dividend
The Company has declared an interim dividend of 1.45p per ordinary share (31 December 2021: 1.25p) payable on 28 April 2023 to members on the register as at 31 March 2023. The shares will trade ex-dividend
At 31 December 2022 there were 400,867,176 ordinary shares in issue (31 December 2021 and 30 June
At 31 December 2022 there were 400,867,176 ordinary shares in issue (31 December 2021 and 30 June
31 Dec 2022 (unaudited) £'000
31 Dec 2022 (unaudited) £'000
Total return £'000
Total return £'000
Revenue return £'000
Revenue return £'000
Half-year ended 31 Dec 2021 (unaudited)
Half-year ended 31 Dec 2021 (unaudited)
Total return £'000
Total return £'000
31 Dec 2021 (unaudited) £'000
31 Dec 2021 (unaudited) £'000
Year ended 30 June 2022 (audited)
Year ended 30 June 2022 (audited)
Total return £'000
Total return £'000
30 June 2022 (audited) £'000
30 June 2022 (audited) £'000
Extract from the Statement of Comprehensive Income
Extract from the Statement of Comprehensive Income
Gains/(losses) on investments held
Gains/(losses) on investments held
Expenses, fi nance costs and
Expenses, fi nance costs and
Profi t/(loss) for the period and
Profi t/(loss) for the period and
Return per ordinary share - basic
Return per ordinary share - basic
Extract from the Balance Sheet
Extract from the Balance Sheet
Investments held at fair value
Investments held at fair value
Net asset value per ordinary
Net asset value per ordinary
Dividends
Dividends
on 30 March 2023. Share capital
on 30 March 2023. Share capital
2022: 400,867,176).
2022: 400,867,176).
Sector exposure
Sector exposure
As a percentage of the portfolio excluding cash
As a percentage of the portfolio excluding cash
31 Dec 22 30 Jun 22 % %
31 Dec 22 30 Jun 22 % %
31
31
30Jun22
30Jun22
Dec 22
Dec 22
Industrials 37.1 34.1 Consumer Discretionary 23.0 22.5 Financials 14.9 13.1 Technology 10.4 12.0 Utilities 3.8 5.1 Consumer Staples 3.2 4.1 Energy 2.3 2.0 Basic Materials 2.1 2.1 Real Estate 1.5 1.2 Health Care 1.7 2.1 Telecommunications – 1.7
Industrials 37.1 34.1 Consumer Discretionary 23.0 22.5 Financials 14.9 13.1 Technology 10.4 12.0 Utilities 3.8 5.1 Consumer Staples 3.2 4.1 Energy 2.3 2.0 Basic Materials 2.1 2.1 Real Estate 1.5 1.2 Health Care 1.7 2.1 Telecommunications – 1.7 The European Smaller Companies Trust PLC 201 Bishopsgate London EC2M 3AE The European Smaller Companies Trust PLC 201 Bishopsgate London EC2M 3AE
This report is printed on Revive silk 100% recycled, contains 100% recycled waste and is manufactured at a mill certifi ed with ISO 14001 environmental management standard. The pulp used in this product is bleached using an Elemental Chlorine Free process (ECF). This report is printed on Revive silk 100% recycled, contains 100% recycled waste and is manufactured at a mill certifi ed with ISO 14001 environmental management standard. The pulp used in this product is bleached using an Elemental Chlorine Free process (ECF).
If undelivered please return to the above address Printed by Leycol JHI 9227/1222 If undelivered please return to the above address Printed by Leycol JHI 9227/1222