European Smaller Cos Trust PLC on Thursday said it was an exciting time for the European smaller company space, citing structural growth trends such as the green transition and artificial intelligence.

The FTSE 250-listed investor, which backs small and medium-sized companies in Europe, said net asset value per share improved 9.1% to 201.01 pence as at June 30, from 184.26p a year ago.

NAV total return was 12% for the financial year ended June 30, outperforming its benchmark, the MSCI Europe ex UK Small Cap index, which had a total return of 10%. It was however worse than the company’s total return of 16% it had reported for financial 2023.

Chair Christopher Casey said: ‘It has been encouraging to see interest in the European smaller company arena return over the course of the year and the company to have participated profitably from this trend. Inflation has been tamed though interest rates have yet to meaningfully decline. Tragically the conflict in Ukraine festers on, although the energy shock has largely been contained.

‘A global recession has not manifested and a ’soft landing’ looks increasingly plausible. The purchasing managers’ index has yet to see a rebound, but there is growing optimism that the market suffering is close to being over. Smaller companies are well positioned to benefit from things getting better and the fund management team is well placed to take advantage of the situation.’

European Smaller proposed a final dividend of 3.35p per share, up 3.1% from 3.25p a year ago. It brings the total payout to 4.80p, up 2.1% from 4.70p.

Looking ahead, Chair Casey said: ‘We have begun to see interest rates reduce to more appropriate levels across the globe, but most importantly in the US. This combined with reserve rate cuts and financial stimulus in China, is a welcome relief for the global economy and for European smaller companies.’

Noting that elections in the US had ‘scope to create further doubt for our markets,’ he added: ‘Europe is fortunate to be the provider of the ’picks and shovels’ of the big structural growth trends such as artificial intelligence, the ’green transition’ and industrial automation. It is an exciting time for the European smaller company space.’

European Smaller shares were down 0.5% at 177.20 pence each on Thursday morning in London.

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