Montanaro European Smaller Companies has published its results for the year ended 31 March 2014. These show the net asset value rising by 6.0%, materially less than the 28.2% rise posted by the company’s benchmark. The discount widened over the year and so the share price appreciated by 4.0%.
The Board is led by AR Irvine (pictured), his statement says the reason for the underperformance over the year was that the fastest rising stocks were at the “cheaper, lower quality, more cyclical end of the market” – stocks that do not fit into the investment approach adopted by Montanaro European Smaller Companies (which is to focus on strong management teams, sound balance sheets and good business franchises, and stocks which the manager believes offer the potential for good long term returns). The strength of sterling also had an adverse impact on the net asset value during the year -they say this took about 28p off the NAV (which was 593.3p at the end of March).
Earnings also fell on the year but the Board decided to increase the dividend by 3.7% to 7.0p, dipping marginally into revenue reserves to support this. The fall in the management fee announced recently will boost the income account over the coming year.