Global Smlr Cos.Tst - Annual Financial Report
22/06/2023 07:00
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RNS Number : 5044D Global Smaller Cos. Trust PLC (The) 22 June 2023
LONDON STOCK EXCHANGE ANNOUNCEMENT
The Global Smaller Companies Trust PLC
Audited Statement of Results
for the year ended 30 April 2023
Legal Entity Identifier: 2138008RRULYQP8VP386
Information disclosed in accordance with Disclosure Guidance and Transparency
Rule 4.1
Financial highlights
Net Asset Value with debt at fair value ('NAV') total return of -2.9% versus
-2.1% from the Benchmark
The NAV fell to 165.7p from 172.8p.
Share price total return of -6.2%
The share price ended the year at 144.6p.
Total dividend of 2.30 pence
53rd consecutive annual increase, up by 25.0%.
Shares ended the year at a discount to the NAV of 12.7%
Date: 22 June 2023
Contact: Peter
Ewins
Columbia Threadneedle
Investment Business Limited
020 7628 8000
Chairman's Statement
For equity investors, the year under review has been challenging. Inflation
and the consequent need for monetary policy tightening were dominant
influences through the year, with the devastating war in Ukraine continuing to
cast a heavy shadow, adding to the already tense geo-political climate.
The World Health Organisation's declaration of the COVID pandemic as "no
longer a global public health concern" and the easing of pandemic restrictions
in China in early 2023 lifted investor sentiment somewhat, before this was to
be shaken once again by the emergence of problems across the banking sector in
March.
The interest rate environment has been unhelpful for stock market sentiment
and, given their greater economic sensitivity, higher rates are especially bad
for smaller companies. Unsurprisingly, small caps struggled relative to larger
counterparts in most parts of the world, with the main exception being within
Asia, where they held up better.
Performance and the discount
Against a difficult global market backdrop, especially for more growth
orientated stocks, the Company's Net Asset Value ('NAV') total return (with
long-term borrowings at fair value) over the twelve months was -2.9% ending
the year at 165.7p per share. While negative returns are never welcome, the
second six months of the year actually delivered a modest recovery, helped by
hopes that the period of rising interest rates might be coming to an end.
In the Company's Half Year Report, the Manager highlighted that investment
trust discounts had widened out given increased caution around the economic
outlook and that smaller company funds in particular had been impacted by this
trend. Starting 2022/23 at 9.6%, the Company's discount reached 14.1% at the
end of October 2022 and closed the financial year at 12.7%, significantly
wider than the Board's sub 5% target. The wider discount meant that the share
price fell by 7.4% over the year to 144.6p, or by 6.2% on a total return
basis.
While recognising that share buybacks may not have much impact on our discount
in an environment where other investment trust discounts are widening, the
Board continues to believe that a consistently applied buyback approach is in
shareholders' best interests, providing liquidity for those in need of an exit
along with NAV accretion to remaining holders. Over the year, some 24.6m
shares which represented 4.5% of the starting share capital (2022: 26.2m),
were repurchased across some 196 trading days, enhancing the NAV by 0.4% in
the process. The chart on page 5 of the Report and Accounts illustrates the
Company's discount (and premium) over the last 10 years and that of the wider
investment trust sector, providing a reminder that discounts/premiums in the
investment trust space are cyclical.
During the course of the year, the Manager has stepped up marketing activity
over a number of channels and is working to enhance the messaging around the
core investment proposition, highlighting the investment management team's
approach to stock selection, which focuses on quality and valuation discipline
across a diversified smaller company portfolio. Generating more interest in
the Company's shares from both existing and new investors, together of course
with good investment performance, will be key in helping to address the
discount in the medium term.
The Benchmark
In April the Board announced a change to the Company's Benchmark with effect
from 1 May 2023 for the new financial year. The Benchmark return has been
calculated from the blended returns from UK and international small cap
indices, with the former and latter having a 30% and 70% weighting
respectively. Over the years, the share of the Company's portfolio invested in
domestically listed stocks has been on the decline, reflecting the evolution
of the global investment universe. Essentially the UK market has become a
smaller part of the total world stock market capitalisation with other
markets, particularly in Asia, now offering a wider set of opportunities in
the smaller quoted arena than historically. The weighting in the Benchmark
calculation therefore has been adjusted, making the new Benchmark: 20% Numis
UK Smaller Companies (excluding investment companies)/Index 80% MSCI All
Country World ex UK Small Cap Index. To take account of the withholding taxes
that the Company pays on some overseas dividends, the calculation of the MSCI
index returns will now be measured on a net of tax basis (previously gross
returns have been used).
The returns from the Benchmark used for 2022/23 were -2.1%. Longer-term
cumulative performance total returns from the NAV, Benchmark and share price
are shown in the table below. The compound annualised NAV and share price
returns over the last 25 years are 9.2% and 9.6% respectively, well ahead of
the 3.4% Retail Prices Index annual increase over the same time-frame.
Performance: Total returns over the long-term
1 year 3 years 5 years % 10 years 25 years
% % % %
NAV total return -2.9 43.3 28.2 144.6 811.1
Benchmark total return -2.1 46.1 29.3 137.2 665.2
Share price total return -6.2 35.3 11.8 110.8 897.5
Source: Columbia Threadneedle Investments
Costs and management fee
Ongoing charges were up over the year, moving from 0.75% to 0.79%, mainly
reflecting the lower average daily net asset level. These remain low compared
to many smaller company funds in the market.
The Manager has been paid a management fee of 0.55% per annum of the Company's
net asset value, which is reduced to 0.275% in respect of the market value of
investments held in third party collective funds. Following constructive
discussions with the Manager, the Board has agreed to introduce a tiered
element to the management fee. With effect from 1 May 2023, net assets outside
of collectives in excess of £750m will be charged at a reduced rate of 0.5%
per annum, with any investments made in third party collective investment
schemes remaining subject to a charge of 0.275% per annum of the month end
market value of those investments.
Dividends
Although capital growth has been harder to come by in more recent times,
income returns have been much more positive. Revenue returns per share for the
year rose by no less than 28.6% as income from both UK and overseas based
holdings grew strongly, helped by a post-pandemic profit bounce-back.
Following on from the 10.5% increase in the interim dividend, the Board has
decided to recommend the payment of a final dividend of 1.67p, meaning the
full year payment will be up by 25.0% to 2.30p. This will be paid to
shareholders on 4 August and will be the 53rd consecutive increase in the
Company's dividend. At a time when inflation remains elevated, it is pleasing
that the payout is well up in real terms and this is also a good sign of the
confidence that investee company management teams have in the future of their
businesses.
Market and portfolio performance
The Manager's review starting on page 8 of the Report and Accounts covers the
year's performance in more detail. This year we have included another section
which outlines the core tenets of the Manager's investment philosophy and
approach, illustrated with some individual case studies.
It is fair to say that the environment for investing has changed considerably
in the last couple of years, with the period of ultra-low interest rates
seemingly behind us for a while. Inflationary pressures - initially stemming
from higher commodity prices, supply chain problems in relation to the
pandemic and the war - have been augmented as a result of tight labour markets
in much of the developed world. The process of consequent interest rate
normalisation is clearly creating issues at both a sector and company level,
as evidenced by the recent collapse of a number of US banks. Highly leveraged
businesses have found themselves facing significantly more expensive finance
costs and loss-making or more speculative businesses are finding support from
both equity and debt markets less forthcoming. In essence, market conditions
are increasingly favouring higher quality and lower risk businesses. Merger
and takeover activity has slowed in the past year in the face of the higher
interest rates, but a number of the Company's holdings were still the subject
of approaches this year.
Geographical performance (total return sterling adjusted)
for the year ended 30 April 2023
Portfolio Local smaller companies index
UK -6.3% -3.0%
Europe -2.1% 0.3%
North America -4.2% -3.8%
Japan 9.1% 7.7%
Rest of World* -2.1% -7.4% (Pacific ex Japan)
-1.5% (Latin America)
Source: Columbia Threadneedle Investments
*Performance of the Rest of World portfolio is shown here against both Asian
and Latin American smaller company indices
The table above shows how our regional portfolios performed in the year
compared with the relevant local smaller company indices. As mentioned above,
smaller companies were not immune to the impact of higher interest rates and
slower global growth data. Relative to the local small cap market returns, we
were a little behind in North America though it should be recalled that this
followed a stellar year here in 2021/22 and indeed during the second half of
2022/23, the portfolio outperformed significantly after having had a more
difficult period last summer. We were more meaningfully behind in the UK and
Europe as stock selection proved challenging. The best returns by far came
from our holdings in Japan, where our largest fund holding managed by
Eastspring performed very well. In the Rest of World portfolio of collective
funds, we were pleasingly ahead of the Asian small cap index return which is
where most of our exposure in this part of the portfolio is orientated. The
Manager's Review highlights some changes being made to the comparator smaller
company indices for North America and Europe with effect from the new
financial year.
Asset allocation
Regional allocation made a small positive contribution towards the overall
relative performance of the Company in the year. Over the course of the year,
there were no dramatic changes to the geographic weightings of the portfolio,
though the exposure to North American listed stocks fell back in the second
half as the Manager became less optimistic on the outlook there, in part due
to the possibility for a pull-back in the US dollar. The table below shows the
weightings of the portfolio against the new Benchmark.
Geographical distribution of the investment portfolio as at 30 April 2023
North America 41.7% (43.4%)
UK 25.3% (26.8%)
Rest of World 12.4% (12.2%)
Europe 12.1% (10.8%)
Japan 8.5% (6.8%)
The percentages in brackets are as at 30 April 2022
Source: Columbia Threadneedle Investments
Geographical weightings of the portfolio and the revised Benchmark
Portfolio weight (%) Benchmark weight (%)
UK 25.3 20.0
Europe 12.1 10.5
North America 41.7 45.5
Japan 8.5 8.7
Rest of World* 12.4 15.3
Source: Columbia Threadneedle Investments
Gearing Policy
Although equity market performance has been uninspiring more recently, the
Board remains of the view that making use of borrowing powers over the long
term will serve to enhance shareholder returns. At the end of the year,
effective gearing was 5.2% compared to 4.6% a year earlier. Borrowings were
made up of £35m of 2.26% sterling loan notes maturing in 2039 and £17m
equivalent drawings in US dollars, yen and euros under our revolving credit
facility. The fair value of the loan notes fell by £10.4m in the year,
reflecting the rise in market yields, with the 2.26% rate now looking highly
attractive compared to prevailing market rates.
Environmental, Social and Governance ('ESG')
While your Company is not an ESG badged fund, the fund management team take
close account of ESG factors in making their stock selections. Over the course
of the last year input in this regard from the Manager's Responsible
Investment team has continued to be helpful, with regular updates provided to
the fund managers on specific topics of interest and new ESG developments.
Engagement with the management teams of companies held in the portfolio is
continuous and once again some practical illustrations of this work are
outlined in the Responsible Investment report on pages 22 to 25 of the Report
and Accounts.
Composition of the board and committees
The Board comprises five directors and maintains plans for orderly succession,
ensuring that the right balance of skills, experience, knowledge, independence
and diversity are in place for the Board to operate effectively, as a whole.
It currently meets the FCA diversity requirements relating to gender diversity
and is committed to meeting the target of at least one director being from a
minority ethnic background in the course of 2023.
David Stileman will stand down from the Board in October this year. On behalf
of the Board I would like to thank him for his contribution since his
appointment in 2015 and we wish him well for the future. The process to
recruit his successor is underway.
Annual General Meeting
The Annual General Meeting will take place at The Chartered Accountants Hall,
1 Moorgate Place, London EC2R 6EA on Friday, 28 July 2023 at 12.00 noon. We
hope as many shareholders as possible will attend. The Lead Manager will, as
usual, give a review of the year together with his view on the outlook. We
will also be streaming the meeting live on the internet so that those
shareholders who cannot attend in person will be able to view the proceedings.
The live stream can be accessed by registering here: https://www.
investormeetcompany.com/the-global-smaller-companies-trust-plc/
register-investor
Voting at this year's AGM will be conducted by way of a poll and, therefore,
you are requested to lodge your votes ahead of the meeting by completing your
Form of Proxy or Form of Direction in accordance with the instructions shown
thereon. Their completion and return will not preclude you from attending the
meeting and voting in person. Shareholders who are unable to attend the AGM
are requested to submit any questions they may have with regard to the
resolutions proposed at the AGM or the performance of the Company, in advance
of the meeting to gscagm@columbiathreadneedle.com. Following the AGM, the Lead
Manager's presentation will be available on the Company's website
globalsmallercompanies.co.uk.
Outlook
As always it's hard to predict how markets will perform looking ahead, but it
seems likely that the path of inflation and interest rates in the next few
months will have a large bearing on equity market trends. The lagged impact of
previous rate hikes will be a headwind in the coming period for the global
economy. Having said this, the Manager is continuing to find opportunities in
the markets, helped by the pullback in valuations and by the increased depth
of investment research capabilities within the enlarged Columbia Threadneedle
Investments business. Now that the prolonged period of low interest rates and
"easy money" has come to an end, your Manager's focus on quality companies
with strong balance sheets is starting to pay off. The Board remains confident
in the medium term returns prospects for your Company given the underlying
dynamism within the global smaller company sphere.
Anja Balfour
Chairman
21 June 2023
Principal and Emerging Risks and Future Prospects
The Board's processes for monitoring the principal risks and identifying
emerging risks are set out on page 53 of the Report and Accounts and in note
23 to the Accounts. Any emerging risks that are identified and that are
considered to be of significance are included on the Company's risk assessment
together with any mitigations. These principal and emerging risks are reviewed
regularly by the Audit and Management Engagement Committee and by the Board.
There is a risk that the current high levels of inflation will be sustained
and of course geo-political risk has been heightened as a result of the war in
Ukraine. The principal risks are largely unchanged from those reported in the
prior year. Those identified as most relevant to the assessment of the
Company's future prospects and viability were those relating to the potential
impact from sustained high inflation, inappropriate business strategy,
potential investment portfolio under-performance and its effect on the
Company's share price discount/ premium and dividends, as well as threats to
security over the Company's assets.
Principal Risk: Service providers and systems security - Errors, fraud or
control failures at service providers or loss of data through business
continuity failure or cyber attacks could damage reputation or investors'
interests or result in loss. Cyber risks remain heightened.
Unchanged throughout the year.
Mitigation by strategy: The ancillary functions of administration, company
secretarial, accounting and marketing services are all carried out by the
Manager. Custody and depositary services are provided by third party
suppliers.
The Board monitors the effectiveness and efficiency of service providers'
processes through internal efficiency KPIs.
Actions taken in the year: The Audit and Management Engagement Committee and
the Board have regularly reviewed the Company's risk management framework with
the assistance of the Manager. Regular control reports are provided by the
Manager which cover risk, compliance and oversight of third-party service
providers, including IT security and cyber-threats. Reports from the
Depositary, which is liable for the loss of any of the Company's securities
and cash held in custody unless resulting from an external event beyond its
reasonable control, were reviewed. The Board is satisfied that the continuity
arrangements of all key suppliers continued to work well and as such, this
risk is unchanged.
Principal Risk: Investment performance - Inappropriate business strategy or
policy, or ineffective implementation, could result in poor returns for
shareholders. Failure to access the targeted market or meet investor needs or
expectations, including Responsible Investment and climate change in
particular, leading to significant pressure on the share price. Political risk
factors could also impact performance as could market shocks such as those
experienced in relation to Covid-19 and the war in Ukraine.
Unchanged throughout the year.
Mitigation by strategy: Under our Business Model, a manager is appointed with
the capability and resource to manage the Company's assets, asset allocation,
gearing, stock and sector selection and risk. The individual regional
investment portfolios are managed to provide in combination a
well-diversified, lower volatility and lower risk overall portfolio structure.
The Board holds a separate strategy meeting each year and considers investment
policy review reports from the Manager at each Board meeting. The performance
of the Company relative to its Benchmark, its peers and inflation is a KPI
measured by the Board on an ongoing basis and is reported on page 39 of the
Report and Accounts.
Actions taken in the year: Columbia Threadneedle has been retained as Manager
and continues to deliver on the Company's objective. It operates within a
responsible investment culture under a corporate commitment to four key
Sustainability Principles: Social Change, Financial Resilience, Community
Building and Environmental Impact. Through the Manager, the Company has the
flexibility to innovate, adapt and evolve as Responsible Investment
necessities and expectations change. Marketing and investor relations
campaigns continued throughout the year, including presentations by the Lead
Manager to wealth managers across the country. Detailed reports provided by
the Lead Manager have been reviewed by the Board at each of its meetings.
Strong operational performance from the investment portfolio over the year has
resulted in the dividend for the year increasing by 25.0%. In overall terms
this risk is considered unchanged.
Principal Risk: Discount/premium - A significant share price discount or
premium to the Company's NAV per share, or related volatility, could lead to
high levels of uncertainty or speculation and the potential to reduce investor
confidence. Increased uncertainty in markets due to an event such as Covid-19
or the significant rise in inflation could lead to falls and volatility in the
Company's NAV.
Risk has increased during the year.
Mitigation by strategy: The Board has established share buyback and share
issue policies, together with a dividend policy, which aim to moderate the
level and volatility of the share price discount or premium to the NAV per
share and it seeks shareholder approval each year for the necessary powers to
implement those policies. The discount/premium to NAV at which the Company's
shares trade is a KPI measured by the Board on an ongoing basis and is
reported on page 39 of the Report and Accounts.
Actions taken in the year: Despite actively buying in shares on a regular,
ongoing basis in order to address the imbalance between the supply and demand
of the Company's shares, the discount has remained wider than desired. During
the course of the year, the Manager has stepped up marketing activity over a
number of channels and is working to enhance the messaging around the core
investment proposition. This activity aims to stimulate demand for the
Company's shares from existing and new investors. Given the higher prevailing
discount level the risk is considered to have increased during the year.
Five Year Horizon
Through a series of stress tests ranging from moderate to extreme scenarios,
including the impact of market shocks and based on historical information, but
forward looking over the five years commencing 1 May 2023, the Board assessed
the risks of:
• Sustained high levels of inflation.
• Potential illiquidity of the Company's portfolio.
• Substantial falls in investment values on the ability to meet loan
covenant requirements and to repay and re-negotiate funding.
• Significant falls in income on the ability to continue paying
steadily-rising dividends and maintaining adequate revenue reserves.
The Board also took into consideration the operational robustness of its
principal service providers and the effectiveness of business continuity plans
in place, potential effects of regulatory changes and the potential threat
from competition.
Based on its assessment and evaluation of the Company's future prospects, the
Board has a reasonable expectation that the Company will be able to continue
in operation and meet its liabilities as they fall due over the coming five
years. This period has been chosen because it is consistent with the advice
provided by many investment advisers, that investors should invest in equities
for a minimum of five years. The Company's business model, strategy and the
embedded characteristics listed below have helped define and maintain the
stability of the Company over many decades. The Board expects this to continue
and will continue to assess viability over subsequent five year rolling
periods.
Statement of Directors' Responsibilities in Respect of the Financial
Statements
In accordance with Chapter 4.1.12 of the Disclosure Guidance and Transparency
Rules the Directors confirm, in respect of the annual report for the year
ended 30 April 2023 of which this statement of results is an extract, to the
best of their knowledge that:
· the financial statements, prepared in accordance with applicable
accounting standards, give a true and fair view of the assets, liabilities,
financial position and loss of the Company;
· 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; and
· in the opinion of the Directors the annual report and financial
statements, taken as a whole, are fair, balanced and understandable and
provide the information necessary for shareholders to assess the Company's
position and performance, business model and strategy.
On behalf of the Board
Anja Balfour
Chairman
21 June 2023
Income Statement
for the year ended 30 April 2023 2022
Revenue Capital Total Revenue Capital Total
£'000s £'000s £'000s £'000s £'000s £'000s
Losses on investments - (50,067) (50,067) - (16,127) (16,127)
Foreign exchange (losses)/gains (6) 115 109 16 517 533
Income 16,214 1,656 17,870 13,418 581 13,999
Management fee (1,082) (3,247) (4,329) (1,251) (3,753) (5,004)
Other expenses (1,070) (29) (1,099) (955) (22) (977)
Net return before finance costs and taxation 14,056 (51,572) (37,516) 11,228 (18,804) (7,576)
Finance costs (269) (808) (1,077) (233) (699) (932)
Net return on ordinary activities before
taxation 13,787 (52,380) (38,593) 10,995 (19,503) (8,508)
Taxation on ordinary activities (1,167) - (1,167) (754) - (754)
Net return attributable to equity shareholders
12,620 (52,380) (39,760) 10,241 (19,503) (9,262)
Return per share (basic and diluted) - pence 2.34 (9.73) (7.39) 1.82 (3.46) (1.64)
The total column of this statement is the profit and loss account of the
Company.
All revenue and capital items in the above statement derive from continuing
operations.
A statement of total comprehensive income is not required as all income and
expenses of the Company have been reflected in the above statement.
Statement of Changes in Equity
for the year ended 30 April 2023
Share Capital Total
Share premium redemption Capital Revenue shareholders'
capital account reserve reserves reserve funds
£'000s £'000s £'000s £'000s £'000s £'000s
Balance at 30 April 2022 15,513 212,639 16,158 685,538 15,456 945,304
Movements during the year
ended 30 April 2023
Dividends paid - - - - (10,305) (10,305)
Shares repurchased by the
Company and held in treasury - - - (35,804) - (35,804)
Net return attributable to equity
shareholders - - - (52,380) 12,620 (39,760)
Balance at 30 April 2023 15,513 212,639 16,158 597,354 17,771 859,435
for the year ended 30 April 2022
Share Capital Total
Share premium redemption Capital Revenue shareholders'
capital account reserve reserves reserve funds
£'000s £'000s £'000s £'000s £'000s £'000s
Balance at 30 April 2021 15,513 212,639 16,158 747,951 15,247 1,007,508
Movements during the year
ended 30 April 2022
Dividends paid - - - - (10,032) (10,032)
Shares repurchased by the
Company and held in treasury - - - (42,910) - (42,910)
Net return attributable to equity
shareholders - - - (19,503) 10,241 (9,262)
Balance at 30 April 2022 15,513 212,639 16,158 685,538 15,456 945,304
Balance Sheet
at 30 April 2023 2022
£'000s £'000s
Fixed assets
Investments 902,350 987,083
Current assets
Debtors 10,720 3,604
Cash and cash equivalents 2,292 13,354
Total current assets 13,012 16,958
Creditors: amounts falling due within one year
Bank loans (17,027) (19,782)
Creditors (3,900) (3,955)
Total current liabilities (20,927) (23,737)
Net current liabilities (7,915) (6,779)
Total assets less current liabilities 894,435 980,304
Creditors: amounts falling due after more than one year
Loan notes (35,000) (35,000)
Net assets 859,435 945,304
Capital and reserves
Share capital 15,513 15,513
Share premium account 212,639 212,639
Capital redemption reserve 16,158 16,158
Capital reserves 597,354 685,538
Revenue reserve 17,771 15,456
Total shareholders' funds 859,435 945,304
Net asset value per share (debt at par value) - pence 163.73 172.04
Statement of Cash Flows
for the year ended 30 April 2023 2022
£'000s £'000s
Cash flows from operating activities before dividends received and interest
paid
(4,787) (5,849)
Dividends received 15,308 12,545
Interest paid (1,038) (926)
Cash inflows from operating activities 9,483 5,770
Investing activities
Purchases of investments (191,230) (214,337)
Sales of investments 219,670 256,951
Transaction costs - (472)
Other capital charges - (22)
Cash inflows from investing activities 28,440 42,120
Cash inflows before financing activities 37,923 47,890
Financing activities
Ordinary dividends paid (10,305) (10,032)
Cash flows from share buybacks for treasury shares (36,034) (43,168)
Drawdown of bank loans (2,417) 11,297
Cash outflows from financing activities (48,756) (41,903)
Net movement in cash and cash equivalents (10,833) 5,987
Cash and cash equivalents at the beginning of the year 13,354 6,870
Effect of movement in foreign exchange (229) 497
Cash and cash equivalents at the end of the year 2,292 13,354
Represented by:
Cash at bank 979 2,179
Short-term deposits less than 3 months 1,313 11,175
Cash and cash equivalents at the end of the year 2,292 13,354
Notes
1 Dividend
The Directors have proposed a final dividend in respect of the year ended 30
April 2023 of 1.67 pence per share, payable on 4 August 2023 to all
shareholders on the register at close of business on 7 July 2023. The
recommended final dividend is subject to approval by shareholders at the
Annual General Meeting.
2 Financial Risk Management
The Company is an investment company, listed on the London Stock Exchange, and
conducts its affairs so as to qualify in the United Kingdom (UK) as an
investment trust under the provisions of Section 1158 of the Corporation Tax
Act 2010. In so qualifying, the Company is exempted in the UK from corporation
tax on capital gains on its portfolio of fixed asset investments.
The Company invests in smaller companies worldwide in order to secure a high
total return. In pursuing the objective, the Company is exposed to financial
risks which could result in a reduction of either or both of the value of the
net assets and the profits available for distribution by way of dividend.
These financial risks are principally related to the market (currency
movements, interest rate changes and security price movements), liquidity and
credit. The Board, together with the Manager, is responsible for the Company's
risk management.
The full details of financial risks are contained in note 23 of the Report and
Accounts.
3 Report and Accounts
This statement was approved by the Board on 21 June 2023. It is not the
Company's statutory accounts. The statutory accounts for the financial year
ended 30 April 2023 have been approved and audited and received an independent
auditors' report which was unqualified and did not include a reference to any
matters to which the auditors drew attention by way of emphasis without
qualifying the report. The statutory accounts for the financial year ended 30
April 2022 also received an independent auditors' report which was unqualified
and did not include a reference to any matters to which the auditors drew
attention by way of emphasis without qualifying the report.
Jonathan Latter
Columbia Threadneedle Investment Business Limited,
Company Secretary
22 June 2023
ENDS
A copy of the Report and Accounts will be submitted to the National Storage
Mechanism and will shortly be available for inspection at
data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism)
The Report and Accounts for the year ended 30 April 2023 will be posted to
shareholders and made available shortly on the Company's website at
globalsmallercompanies.co.uk, where up to date information on the Company,
including daily NAV and share prices, factsheets and portfolio information can
also be found. Copies may also be obtained from the Company's registered
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