Interim Management Statement
June 26 2008 - 4:53AM
UK Regulatory
GARTMORE SMALLER COMPANIES TRUST p.l.c.
Interim Management Statement
for the three months to 31 May 2008 (Unaudited)
This interim management statement has been produced to provide information to
shareholders as a body in accordance with the relevant requirements of the UK
Listing Authority's Disclosure and Transparency rules. It should not be relied
upon by any other party or parties for any other purposes. The views,
information and data in this publication should not be deemed a financial
promotion or recommendation.
Gartmore Smaller Companies Trust p.l.c. is an investment trust company that
seeks to provide shareholders with long-term capital growth through investment
in smaller UK listed companies and unlisted companies quoted on the AIM market
of the London Stock Exchange.
The three-month period to 31 May 2008 was characterised by a deteriorating
economic background both at home and abroad. Investor sentiment was depressed
by fears of rising inflation as a result of rising commodity and food prices,
coupled with ongoing fallout from the credit crisis. Against this backdrop,
smaller company stocks continued to underperform their larger counterparts,
although good stock selection and the Manager's favouring of micro-cap stocks
trading on the AIM market helped to mitigate the decline relative to the wider
small-cap universe. The Net Asset Value per Ordinary share in capital terms
declined by just 0.5% over the period, compared with a fall of 5.6% in the FTSE
SmallCap (excluding investment companies) Index and a decline of 0.6% in the
AIM All-Share Index.
The Company's largest holding, BATM Advanced Communications, one of the world's
top-three manufacturers of routers and switches, delivered the strongest
contribution to performance after announcing full-year results which were well
ahead of market expectations. The company also declared its first dividend for
a decade and reported a full order book and an excellent outlook for the next
four years. In the support services sector, shares in rail infrastructure group
Jarvis posted a sharp rise after the company announced a return to
profitability. Industrial component distributor Brammer was another notably
good performer. Portfolio performance also benefited from ongoing corporate
activity, with semi-conductor supplier Zetex and AIM-listed Lloyd's insurer
Heritage Underwriting Agency being acquired at good premiums to their
respective market prices. Takeover speculation also pushed higher the share
price of AIM-listed oil explorer Regal Petroleum after the company announced
that it is in preliminary discussions regarding possible transactions in
relation to its assets in Ukraine. Conversely, our large holding in
telecommunications messaging supplier eServGlobal was the worst performer over
the period despite news of further contract wins in Latin America and positive
guidance on earnings. Our investment in biofuel specialist D1 Oils was also a
major drag on performance after the company revealed that imports of heavily
subsidised biodiesel were impacting its business. The company has since
announced that it is to withdraw from UK refining and will focus upon growing
its plant science business and developing its joint venture with BP.
Macro-economic concerns are dominating equity markets currently. However, these
concerns are in stark contrast to the evidence that the Manager is seeing from
many of the businesses in which the Company is invested. Among the UK's
smallest companies, valuations are low and a weakening currency, innovative
products and strong order books mean that the Manager continues to unearth a
range of attractive opportunities.
Performance *:
At 31 May 3 months 1 year 3 years 5 years 10 years
2008
Net Asset Value per 608.1p -0.3% -19.0% 15.7% 85.5% 26.5%
Ordinary share **
Benchmark *** 2745.0 -5.6% -32.6% -1.8% 33.9% -1.2%
Mid-market Price per 474.5p -0.6% -25.2% 9.2% 81.5% 1.1%
Ordinary share
Discount 22%
*Source: Thomson Reuters Datastream. **Basis: Net Asset Value includes current
year revenue. Performance figures of more than one year are based on Net Asset
Values which exclude undistributed revenue. ***FTSE SmallCap (excluding
investment companies) Index.
Ten Principal Investments at 31 May 2008:
Company Market Value % of
�'000 Total
Assets
BATM Advanced Communications 3,325 3.9
Management Consulting Group 2,310 2.7
Brammer 2,074 2.5
Aero Inventory 2,045 2.4
Gulf Keystone Petroleum 1,935 2.3
eServGlobal 1,932 2.3
Pace 1,876 2.2
Avocet Mining 1,501 1.8
IQE 1,327 1.6
Redstone 1,311 1.6
At 31 May 2008, the Company's portfolio comprised 173 investments
Portfolio Distribution by Broad Industrial Sector at 31 May 2008:
%
Industrials 30.7
Technology 24.5
Consumer Services 9.5
Health Care 8.7
Oil & Gas 8.6
Financials 7.4
Basic Materials 7.3
Consumer Goods 2.3
Utilities 0.8
Telecommunications 0.2
Portfolio Distribution by Equity Market at 31 May 2008:
%
FTSE AIM 59.2
FTSE SmallCap 26.8
FTSE Fledgling 9.8
FTSE 250 4.2
Financial Position:
(Unaudited) (Audited)
As at As at
31 May 31 August
2008 2007
�'000 �'000
Investments 76,431 103,599
Cash and net current assets 7,826 (5,213)
_____ _____
Net Assets attributable to Ordinary 84,257 98,386
shares
===== =====
Material Events and Transactions:
On 6 March 2008, the Company repurchased 20,000 Ordinary shares for
cancellation at a price of 475 pence per share, a discount of 21.6% to the
prevailing Net Asset Value.
An interim dividend of 1.00 pence per Ordinary share was paid on 19 May 2008.
Price and Performance Information:
The Company's Ordinary shares are listed on the London Stock Exchange and the
price of these shares is published in the Financial Times under `Investment
Companies'. Real-time share price information is available via BT landline on
0906-843 0000 (select menu option 2 and then enter company code 3192). Calls
are charged at 60p per minute at all times. The Company's Net Asset Value is
calculated daily and can be viewed on the London Stock Exchange website at
www.londonstockexchange.com and via a link from the Gartmore web site at
www.gartmore.co.uk. Information on the Company is available on the Gartmore
website, www.gartmore.co.uk. The Company's discrete area on the site can be
accessed via the "Fund range" menu or directly using
www.gartmoresmallercostrust.co.uk or www.gartmoresmallercostrust.com .
Further information can be obtained from Gartmore as follows:
Free investor helpline: 0800-289 336
Internet address: www.gartmore.com
e-mail address: helpline@gartmore.com
The Directors are not aware of any significant events or transactions which
have occurred between the date of the financial information and the date of
publication, which have had a material impact on the financial position of the
Company.
Gartmore Investment Limited
Company Secretary
26 June 2008
END
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