Global Smlr Cos.Tst - Half-year Report
15/12/2023 07:00
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RNS Number : 8949W Global Smaller Cos. Trust PLC (The) 15 December 2023
LONDON STOCK EXCHANGE ANNOUNCEMENT
The Global Smaller Companies Trust PLC
Unaudited Statement of Results
for the half year ended 31 October 2023
Legal Entity Identifier: 2138008RRULYQP8VP386
Information disclosed in accordance with Disclosure Guidance and Transparency
Rule 4.1
SUMMARY OF UNAUDITED RESULTS FOR THE HALF YEAR ENDED 31 OCTOBER 2023
· Net Asset Value with debt at fair value ("NAV") decreased to 153.67p
per share, giving a total return of -6.3% compared to the Benchmark total
return of -3.6%
· The share price ended the period at 130.6p, delivering a total return
to shareholders of -8.6%
· Interim dividend increased by 7.9% to 0.68p per ordinary share
Date: 15 December 2023
Contact: Peter
Ewins
Columbia Threadneedle
Investment Business Limited
020 7464 5000
Chairman's Review
The first half of the 2023/24 financial year saw a continuation of some of the
trends from the previous twelve months. In particular, the dominant talking
point has been how long the period of heightened inflationary pressures will
last, and consequently for how long interest rates need to remain at present
or even higher levels. Very sadly too, geopolitical developments have remained
in focus, with the outbreak of conflict in the Middle East a further
complicating factor alongside the Ukraine war and the strained political and
trading relationship between the US and China.
It was, therefore, perhaps unsurprisingly a challenging period for equities.
With a risk averse mood in markets, smaller companies lagged in most parts of
the world. Although many of our holdings continued to navigate the tricky
environment well and produced solid results, there were exceptions to this and
our investment portfolio in overall terms had a difficult six months in
comparison to the Company's Benchmark (20% Numis UK Smaller Companies
excluding investment companies Index/80% MSCI World All Countries ex UK Small
Cap Index (net)). Taking the Company's long term liabilities at fair value,
the NAV fell to 153.67p, a -6.3% total return for the six months, compared to
a return of -3.6% from the Benchmark.
The negative market environment put more pressure on investment trust
discounts and the Company's share price fell by 9.7% in the six months to
130.6p, or by 8.6% in total return terms. As a result, the discount ended the
period at 15.0%. The Board continued to use its buyback powers actively,
repurchasing 10.7m shares over the six months. In parallel the Board has
worked with the Manager to increase its efforts to bring the advantages of
investing in the Company to a wider audience of institutional and retail
investors.
Dividends
While capital returns have been pressured, we can take some comfort from
another strong period in terms of income from the portfolio. Revenue returns
per share rose by 23.1% to a new high at the interim stage. As a consequence,
the Board decided to increase the interim dividend by 7.9% to 0.68p per share.
Shareholders on the register on 30 December 2023 will receive this dividend on
26 January 2024.
Board Changes
Having followed a formal recruitment process, the Company appointed two new
Directors, Bulbul Barrett and Randeep Grewal, on 1 December 2023. On 11
December 2023, David Stileman retired as a Director. From the date of his
appointment in 2015, David has contributed significantly to the Company,
bringing wide-ranging international experience to the Board. We record our
appreciation and gratitude to David for his dedicated service to the Company.
Lead Manager Change
Having been involved in the management of the Company for more than 26 years
and Lead Manager since August 2005, Peter Ewins has indicated his intention to
step down from his role and retire from Columbia Threadneedle Investments in
June 2024. The Board has been fully engaged with Columbia Threadneedle
Investments in ensuring a smooth handover of Peter's responsibilities and we
are pleased to announce that Nish Patel will become joint Lead Fund Manager of
the Company, alongside Peter, with effect from 1 January 2024 and Lead Fund
Manager with effect from 1 May 2024. Nish has worked closely with Peter for a
long period of time, managing assets for the Company for more than 15 years.
Peter has made an important contribution in continuing the Company's strong
record of delivering long-term growth in capital and income and we are
confident that Nish, supported by the wider investment resources within
Columbia Threadneedle Investments, will build on Peter's achievements.
I would like to express our warmest thanks to Peter for his commitment and
contribution to the Company.
Graham Oldroyd
Interim Chairman
14 December 2023
Lead Manager's Review
Market background
Throughout the period under review, economic data was closely monitored
particularly in relation to inflation and what signals this was sending
concerning the outlook for interest rates. While headline inflation rates have
moderated considerably over the period in the US, Europe, the UK and elsewhere
over the last six months, they mostly remain above targeted levels, which
prompted further interest rate increases. Labour markets remained generally
tight reflecting demographics and the impact of the pandemic in many developed
countries. This has driven elevated wage inflation impacting upon the
corporate profit margin outlook.
Tighter monetary policy has been unhelpful for equity market sentiment and
valuations. There is more competition for investors' capital with higher
investment yields now available on government and corporate bonds and more
satisfactory returns also available from deposit accounts. Higher interest
rates have acted as planned by central banks to slow their local economies.
With fiscal policy providing more support plus the benefit of better momentum
heading into 2023, the US economy remained more resilient than those in Europe
and the UK, where the impact of higher energy and food prices has been more
significant on the cost of living. Within Asia, the Chinese economy failed to
pick up as much as had been expected following the easing of pandemic
restrictions early in 2023 with the property market still suffering from over
supply. Japan has remained something of an outlier, with no move up in
interest rates driving further weakness in the yen and helping to deliver a
relatively steady stock market performance.
Regional portfolio performance
The chart below shows how the different geographical regional portfolios
performed over the period versus the local smaller companies comparator
indices, with all total return numbers measured in sterling.
Geographical performance (total return sterling adjusted)
for the half year ended 31 October 2023
Portfolio
Local smaller companies index
North America -3.0% -1.9%
UK -12.6% -9.7%
Europe -12.4% -11.0%
Japan -1.0% 0.0%
Rest of World -1.4% +2.1% (Asia Pacific ex Japan)
+2.8% (Latin America)
Source: Columbia Threadneedle Investments
North America
Small cap stocks, as measured by the MSCI North American Small Cap index
(net), delivered a modest negative sterling total return in the period, albeit
this would have been worse had it not been for a strengthening of the dollar.
Our portfolio's -3% return was worse than this with positive stock selection
in Healthcare more than offset by underperformance from our Financial and
Basic Materials holdings.
In aggregate, our Healthcare holdings did well and we benefitted from not
holding individual biotechnology stocks which were under pressure. Managed
care provider Molina Healthcare announced encouraging results and rose by
11.8% with medical claims costs lower than anticipated. Syneos Health, the
clinical services company was taken over during the period, lifting its
shares, while our holding in care services company The Ensign Group once again
delivered a resilient operational performance despite cost pressures. In
contrast, diagnostic testing services company QuidelOrtho saw a fall off in
business activity, partly due to a slowdown in Covid-19 related business.
Within Financials, PRA Group, a purchaser and servicer of consumer loans was a
weak performer, falling 66.1% as the market became cautious around credit card
delinquencies on its balance sheet. This more than offset a positive
contribution from insurance broking company Brown & Brown, which continues
to execute its acquisition strategy successfully, also benefiting from higher
insurance pricing.
In Basic Materials, a weaker gold and general commodity pricing backdrop led
to falls in the shares of Wheaton Precious Metals and Lundin Mining, with
graphite electrode supplier GrafTech International suffering from a cyclical
downturn in the steel industry and concern about its borrowings. Our holdings
in construction related businesses Eagle Materials and Martin Marietta
Materials in contrast, performed well again, helped by signs that spending in
the infrastructure market was rising on the back of government investment,
with their earnings growth also benefiting from higher product selling prices.
Another strong performer which we bought into in the last financial year was
Curtiss-Wright. This is a manufacturer of niche, mission-critical components
for the aerospace, industrial, defence and power sectors. The company is
seeing good growth in most of its businesses because of favourable long-term
trends and it also benefitted from an easing in supply chain related
constraints.
In the strongly performing Energy sector, three of our holdings did well as
the oil price rallied. Bristow Group, a provider of helicopter transportation
services to offshore energy locations saw an improvement in pricing as
industry spending continues to recover. Vitesse Energy which has interests
mainly in North Dakotan oil and gas assets rose 28.9% as it delivered solid
numbers following its listing in the previous year. Kosmos Energy, an oil and
gas exploration and production company, also did well as it advanced its major
West African LNG project, bringing a significant improvement in cashflow into
sight.
In terms of other winners and losers in the period, in the former camp was
Spectrum Brands which rose as the company completed the long-awaited sale of
its hardware business to a larger peer. Also doing well were Avnet and CDW,
both distributors of technology products, with the former seeing an
improvement in profitability largely driven by better operational execution
while the latter benefitted from resilient spending by its customer base.
MaxLinear, on the other hand, saw its shares fall 37.8% as the consumer
related semiconductor market turned down and the company was forced to abort a
planned acquisition. Our holding in recycled car parts business LKQ also fell
by 23.9%, with margins weaker as a result of a worse business mix, lower metal
prices and strike activity. Agricultural chemicals producer American Vanguard
fell in common with peers as destocking took hold in this sector. Real estate
was a weak sector in the face of the higher interest rates, and medical office
buildings company Healthcare Realty Trust underperformed, as the gains from
its merger with a peer in 2022 were slow to emerge and further acquisitions
were paused in light of relatively high leverage. Finally, Nomad Foods, the
European orientated branded frozen foods company, lagged as volumes were
pressured by a move by hard pressed consumers into private label products.
UK
The UK small cap market underperformed other markets, excluding Europe, in the
six months. Higher interest rates and the phased rolling off of fixed rate
mortgage deals at the low rates from a few years ago, hurt the housing market.
This, in combination with general inflationary pressures, dented consumer
sentiment, while UK company management teams have also had to recognise higher
inflation than elsewhere in wage settlements placing pressure on margins.
Our portfolio was behind the local small cap market performance. As with other
markets, a number of holdings have faced individual challenges or business
issues as the period progressed. Within Financials, shares in buy to let
mortgage lender OSB Group fell 39.6% in the period, undermined by the
consequences of higher interest rates, which was changing the behaviour of its
landlords at the time of loan renewals and, thereby, reducing the company's
anticipated profit margins. While this was disappointing, more recent updates
from the company have been more encouraging. Another casualty was an IPO in
which we participated in the period, CAB Payment Systems, a payments services
company serving customers across a number of emerging markets, shocked the
market by shortly after the float flagging an effective ceasing of business in
two markets.
The slowdown in the housing market prompted large downgrades to profit
expectations among housebuilders, with our holding in Crest Nicholson unable
to buck the trend. Specialist natural ingredients supplier Treatt fell, with
demand from some of its food and beverages customers impacted by destocking.
Watches of Switzerland shares had been weak on fears of a demand downturn but
they fell again after its most important supplier Rolex announced the
acquisition of a European based peer retailer, raising fears around product
availability looking forward.
Other poor performers on the UK portfolio included Next 15 Group, Energean and
XP Power. Media services companies have generally been weak in 2023 so far, as
fears have grown that more discretionary services could be cut back by
companies seeking to make economies to save costs, but Next 15 has delivered a
resilient performance so far, despite its share price sell-off. Energean
shares fell sharply after the attack on Israel; the company is an offshore
supplier of gas into the Israeli market and the risk profile of the company
has clearly gone up. XP Power, a provider of power control components to the
electronics industry fell after a profit warning flagged up a sudden slowdown
in business, especially in the Chinese market.
More positively, a number of our holdings surprised to the upside despite the
macro backdrop. Ashtead Technology Holdings, which rents equipment out to
operators in the offshore energy and renewables sectors rose 40.8% as it
guided up its expectations given an uptick in activity in these areas. In
software and services, Bytes Technology also beat expectations with its strong
relationship with Microsoft continuing to help it to gain market share. Shares
in leasing software business Alfa Financial Software were also up over the
period as two bid approaches were made for the company, albeit no firm offer
emerged. Ascential rose strongly late in the period as it announced the sale
of its digital marketing and product design units, leaving it focused on its
events business and opening the path to a material return of capital to
shareholders.
While consumer activity has been impacted by higher interest rates, The
Restaurant Group (company of Wagamama and other brands/pubs) also attracted
attention from external parties and, late in the period, agreed to accept an
offer from a private equity operator. Ten pin bowling company Hollywood Bowl
was another good performer in the leisure arena, with trading remaining
resilient and the company progressing its international expansion in Canada.
Baltic Classifieds Group which operates a number of leading consumer facing
portals in Eastern Europe reported an impressive 19% organic growth in its
latest results and started a share buyback programme which helped its share
price recover. 4imprint was strong again as its promotional products sales
mainly focused in North America beat earlier projections.
Two other companies doing well were Kier Group and Workspace Group.
Construction and infrastructure services company Kier has been executing its
pipeline better in recent times and a much improved balance sheet position
allowed the company to return to making dividend payments. While real estate
in the UK as in other markets was a weak sector, Workspace Group announced
strong results with rents continuing to grow in its flexible leased properties
serving the dynamic SME business community in London and the South East.
Europe
European small caps struggled in the period with investor sentiment souring as
interest rates were pushed up by the European Central Bank and corporate
earnings came under pressure.
Destocking by customers undermined several holdings, with helmet technology
company MIPS still suffering from an inventory correction in the bike channel
which has taken longer than expected to work through. Chemicals distribution
company IMCD also produced weaker results as its customers also reduced their
stock levels amid the macro slowdown. In beverages markets, a number of
companies are suffering from similar issues, with cognac company Remy
Cointreau impacted by sluggish sales trends in both the US and China. Bottle
manufacturer Vidrala fell in the summer as weaker beer consumption trends in
Germany led to a drop-off in volumes.
Two of the weakest performers were medical equipment company Tecan Group and
facility management business Coor Service Management. Tecan fell despite solid
first half results, partly because the market is concerned about the demand
outlook given funding pressures in the biotechnology sector despite the
company having little exposure to this space. Coor lost a significant contract
in the period prompting earnings downgrades and a derating. Niche construction
equipment supplier Engcon fell as the outlook for its home Scandinavian market
deteriorated, while Industrial stocks Indutrade and Interpump also declined
despite reporting solid results to date.
While it has been a tough period, we still had a number of strong performers.
Top of the list in terms of contribution was semiconductor equipment business
ASM International, which jumped 18.4% as results held up better than feared
amid a slowdown in the semiconductor market and investors took the view that
the company was an AI winner. In the same area, a new position in Technoprobe
also benefitted from enthusiasm in relation to AI. While higher interest rates
have pressured ratings for many consumer staples, our holdings in Lotus
Bakeries and Glanbia were up 11.8% and 8.2% respectively. The former reported
excellent 21% organic sales growth and has managed cost pressures well,
showing good pricing power with its core biscuit lines. Glanbia too has
managed its cost base well and a more efficient supply chain plus more focused
brand approach in performance nutrition led to upgrades to forecasts.
Three Financial stocks served us well, with Scandinavian pension, asset
management and insurance company Storebrand benefiting from higher interest
rates which, in combination with a disposal, have improved its solvency
position allowing it to return more cash to shareholders. In Denmark,
Ringkjoebing Landbobank was upgraded as the company announced better than
expected loan growth, low credit losses and higher net interest income.
Italian asset manager Azimut was also an outperformer as it continued to see
inflows to its fund range, which is encouraging given a tough overall market
for fund management companies.
Other European risers included Fluidra, CTS Eventim and Siegfried Holdings.
Swimming pool supplies company Fluidra announced better than expected numbers
despite destocking pressures in the sector, with cost savings coming through
well. CTS Eventim, the leading ticketing business, produced excellent numbers
as live music and events returned strongly post the pandemic ending. Siegfried
Holdings, a supplier of medical technology rose after it was upgraded on the
back of solid first half results, bucking this sector's trend.
Japan
The Bank of Japan maintained a more relaxed approach to monetary policy, with
its core interest rate still slightly negative. Consequently, the yen
depreciated further on the currency markets. This helped the performance of
the equity market, supporting the outlook for exporters. Consumer spending,
like elsewhere, has been underpinned by higher wage inflation and some
recovery in travel. At the corporate level, share buybacks have picked up
pace, with cash-rich companies becoming more willing to deploy this capital to
enhance their return profiles. These factors plus evidence of more foreign
interest in the market, meant that returns in Japan were better than most
other markets, with the MSCI Japan Small Cap index (net) flat for the six
months.
During the latter part of the period, we decided to sell our holdings in the
abrdn SICAV I - Japanese Smaller Companies Sustainable Equity Fund and the
Baillie Gifford Japanese Smaller Companies Fund. These had not performed well
for some time and underperformed again in this period. Following an extensive
amount of due diligence, we have decided to use the proceeds from these sales
to invest in a portfolio of around 30 individual Japanese small company
equities and, henceforth, the investments in these regions will appear as
individually named holdings in the Company's portfolio listing. These stocks
will be selected by a team of fund managers focusing on Japanese equities
within Columbia Threadneedle Investments, who have a strong record of
performance in this market and will report directly to the Lead Manager. In
addition to being a demonstration of the depth of the investment team within
Columbia Threadneedle Investments, this change of approach will lower the cost
of the management of the Company's exposure to Japan as the fee payable to
Columbia Threadneedle Investments is lower than what was being incurred by
holding the two funds which have been sold. We continue to hold our position
in the Eastspring Investments Japan Smaller Companies Fund which represents
just over half of our Japanese exposure now. This delivered an excellent
result in the first half of the year, with a total sterling return of 4.3%, as
value stocks continued to be the best performing part of the small cap market.
Rest of World
Our fund holdings here give us exposure to smaller companies listed on Asian
and Latin American markets in the main, plus certain other global emerging
markets. As a whole, these markets did better than the main developed markets,
although performance was quite widely dispersed between markets, with China,
for example, materially lagging India, within Asia. Latin American small caps
tend to be more volatile, but markets like Brazil have been net beneficiaries
of the Ukraine war situation given their commodity centric nature.
While our portfolio lagged the comparator small cap indices, a significant
part of the underperformance in the period was down to a widening of the
discounts of the investment trusts that we hold: The Scottish Oriental Smaller
Companies Trust and the Utilico Emerging Markets Trust. These companies
performed well in NAV terms but share price performance was hurt by the
discount moves. The Pinebridge Asia ex Japan Small Cap Fund and the Schroder
ISF Global Emerging Markets Smaller Companies Fund underperformed in the
period. The former has suffered from an over-exposure to China at a time when
this market has struggled, while the Schroder's fund had stock selection
issues in India and Taiwan, lacking exposure to some of the AI names.
Asset allocation
The chart below shows the exposure of the portfolio across the different
markets. Over the period, we modestly increased our exposure to Japan and the
Rest of World, while trimming back exposure to Europe. While directionally
these were the right moves, asset allocation made a negative contribution to
performance relative to the Benchmark in the six months, as a result of being
overweight to Europe and the UK and underweight in North America and the Rest
of World.
Geographical distribution of the investment portfolio
Portfolio weighting
31 October 2023 30 April 2023
% %
North America 41.9 41.7
UK 24.1 25.3
Rest of World 13.5 12.4
Europe 10.9 12.1
Japan 9.6 8.5
Source: Columbia Threadneedle Investments
Gearing
Gearing ended the six months at 4.6%, slightly down on the 5.2% at the end of
April, as we continued to take a cautious approach to the use of leverage for
now.
Outlook
As we move into the second half of the financial year, we are seeing some
individual companies exposed to more discretionary areas of consumer and
corporate spending reporting weaker trading as the impact of previous monetary
policy tightening feeds through more broadly. However, since the end of
October equity markets and smaller company shares in particular have rallied,
helped by more encouraging inflation data and, as a consequence, the Company's
share price and NAV have recovered strongly. Performance looking forward is
likely to remain highly sensitive to perceptions around the path of interest
rates. As usual, the investment team continues to monitor the near and medium
term outlooks for the existing portfolio, while at the same time looking for
opportunities to take advantage of lower valuations in the wider markets.
Peter Ewins
Lead Manager
14 December 2023
Unaudited Condensed Income Statement
for the half year ended 31 October 2023 2022
Revenue Capital Total Revenue Capital Total
£'000s £'000s £'000s £'000s £'000s £'000s
Losses on investments - (62,221) (62,221) - (74,769) (74,769)
Foreign exchange gains/(losses) 4 (305) (301) 33 555 588
Income 8,897 66 8,963 7,648 1,296 8,944
Management fees (517) (1,551) (2,068) (544) (1,633) (2,177)
Other expenses (715) (21) (736) (589) (17) (606)
Net return before finance costs and taxation 7,669 (64,032) (56,363) 6,548 (74,568) (68,020)
Finance costs (194) (582) (776) (120) (361) (481)
Net return on ordinary activities before taxation
7,475 (64,614) (57,139) 6,428 (74,929) (68,501)
Taxation on ordinary activities (569) - (569) (577) - (577)
Net return attributable to shareholders 6,906 (64,614) (57,708) 5,851 (74,929) (69,078)
Return per share - pence 1.33 (12.43) (11.10) 1.08 (13.77) (12.69)
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.
Unaudited Condensed Statement of Changes in Equity
Half year ended
31 October 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 2023 15,513 212,639 16,158 597,354 17,771 859,435
Movements during the
half year ended
31 October 2023
Dividends paid - - - - (8,714) (8,714)
Shares repurchased by the Company and held in treasury
- - - (15,248) - (15,248)
Net return attributable to equity
shareholders - - - (64,614) 6,906 (57,708)
Balance at 31 October 2023 15,513 212,639 16,158 517,492 15,963 777,765
Half year ended
31 October 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 2022 15,513 212,639 16,158 685,538 15,456 945,304
Movements during the
half year ended
31 October 2022
Dividends paid - - - - (6,941) (6,941)
Shares repurchased by the Company and held in treasury
- - - (15,376) - (15,376)
Net return attributable to equity
shareholders - - - (74,929) 5,851 (69,078)
Balance at 31 October 2022 15,513 212,639 16,158 595,233 14,366 853,909
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
Unaudited Condensed Balance Sheet
31 October 2023 31 October 2022 30 April 2023
£'000s £'000s £'000s
Fixed assets
Investments 813,434 889,706 902,350
Current assets
Debtors 1,920 1,302 10,720
Cash and cash equivalents 15,777 22,350 2,292
Total current assets 17,697 23,652 13,012
Creditors: amounts falling due within one year
Bank loans (17,033) (16,874) (17,027)
Creditors (1,333) (7,575) (3,900)
Total current liabilities (18,366) (24,449) (20,927)
Net current liabilities (669) (797) (7,915)
Total assets less current liabilities 812,765 888,909 894,435
Creditors: amounts falling due after more than one year
Loan notes (35,000) (35,000) (35,000)
Net assets 777,765 853,909 859,435
Capital and reserves
Called-up share capital 15,513 15,513 15,513
Share premium account 212,639 212,639 212,639
Capital redemption reserve 16,158 16,158 16,158
Capital reserves 517,492 595,233 597,354
Revenue reserve 15,963 14,366 17,771
Total shareholders' funds 777,765 853,909 859,435
Net asset value per share (debt at par value) - pence
151.27 158.52 163.73
( )
Unaudited Condensed Statement of Cash Flows
Half year ended Half year ended
31 October 2023 31 October 2022
£'000s £'000s
Cash flows from operating activities before dividends received and interest
paid
(2,901) (3,245)
Dividends received 9,926 8,744
Interest paid (783) (477)
Cash flows from operating activities 6,242 5,022
Investing activities
Purchases of investments (84,035) (87,071)
Sales of investments 115,449 116,165
Transaction costs - (218)
Other capital charges - (15)
Cash flows from investing activities 31,414 28,861
Cash flows before financing activities 37,656 33,883
Financing activities
Ordinary dividends paid (8,714) (6,941)
Cash flows from share buybacks for treasury shares (15,162 (15,626)
Repayment of bank loans - (2,563)
Cash flows from financing activities (23,876) (25,130)
Net movement in cash and cash equivalents 13,780 8,753
Cash and cash equivalents at the beginning of the period 2,292 13,354
Effect of movement in foreign exchange (295) 243
Cash and cash equivalents at the end of the period 15,777 22,350
Represented by:
Cash at bank 3,037 1,140
Short term deposits less than 3 months 12,740 21,210
Cash and cash equivalents at the end of the period 15,777 22,350
Unaudited Notes on the Condensed Accounts
1 Accounting policies
These condensed financial statements have been prepared on a going concern
basis in accordance with the Companies Act 2006, FRS 102, Interim Financial
Reporting (FRS 104) and the Statement of Recommended Practice "Financial
Statements of Investment Trust Companies and Venture Capital Trusts" (SORP)
issued by the AIC.
The accounting policies applied for the condensed set of financial statements
are set out in the Company's annual report for the year ended 30 April 2023.
2 Dividend
The Directors have declared an interim dividend in respect of the year ending
30 April 2024 of 0.68p per share, payable on 26 January 2024 to all
shareholders on the register at close of business on 30 December 2023. The
amount of this dividend will be £3,477,000 based on 511,354,485 shares in
issue at 11 December 2023. This amount has not been accrued in the results for
the half year ended 31 October 2023.
3 Going concern
In assessing the going concern basis of accounting, the Directors have had
regard to the guidance issued by the Financial Reporting Council. They have
also considered the Company's objective, strategy and policy, the current cash
position of the Company, the availability of its loan facility, compliance
with its covenants and the operational resilience of the Company and its
service providers. It is recognised that the Company is mainly invested in
readily realisable, globally listed securities that can be sold, if necessary,
to repay indebtedness.
Based on this information, the Directors believe that the Company has the
ability to meet its financial obligations as they fall due for a period of at
least twelve months from the date of approval of these financial statements.
Accordingly, these financial statements have been prepared on a going concern
basis.
4 Results
The results for the half year ended 31 October 2023 and 31 October 2022, which
are unaudited and which have not been reviewed by the Company's auditors
pursuant to the Auditing Practices Board guidance on 'Review of Interim
Financial Information', constitute non-statutory accounts within the meaning
of Section 434 of the Companies Act 2006. The latest published accounts which
have been delivered to the Registrar of Companies are for the year ended
30 April 2023; the report of the auditors thereon was unqualified and did
not contain a statement under Section 498 of the Companies Act 2006. The
condensed financial statements shown above for the year ended 30 April 2023
are an extract from those accounts.
By order of the Board
Columbia Threadneedle Investment Business Limited, Company Secretary
Cannon Place, 78 Cannon Street, London EC2N 6AG
14 December 2023
Directors' Statement of Principal and Emerging Risks
The Company's principal and emerging risks are described in detail under the
heading "Principal and Emerging Risks" within the strategic report in the
Company's annual report for the year ended 30 April 2023. They include:
· 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.
· 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
ESG 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.
· 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 could lead to further falls and volatility in the
Company's NAV.
The Directors continue to review the key risk register for the Company which
identifies the risks that the Company is exposed to, the controls in place and
the actions being taken to mitigate them. This is set against a backdrop of
continuing uncertainty as a result of the significant macro economic
influences of higher inflation, and interest rates.
Following the acquisition of BMO GAM EMEA by Ameriprise, the integration of
systems and legal entities with Columbia Threadneedle Investments is now
almost complete. The residual risks from the integration are low and the Board
will continue to monitor this area until full integration is achieved.
The Board believes that there have not been any material changes to the nature
of the risks outlined above since the previous annual report and that the
principal risks and uncertainties, as summarised, remain applicable to the
remaining six months of the financial year. The Board has considered this in
relation to going concern, as set out in note 3.
Directors' Statement of Responsibilities in Respect of the Half Year Financial
Report
In accordance with Chapter 4 of the Disclosure Guidance and Transparency
Rules, the Directors confirm that to the best of their knowledge:
· the condensed set of financial statements has been prepared in
accordance with applicable UK Accounting Standards on a going concern basis,
and gives a true and fair view of the assets, liabilities, financial position
and net return of the Company;
· the half year report includes a fair review of the important
events that have occurred during the first six months of the financial year
and their impact on the financial statements;
· the Directors' Statement of Principal and Emerging Risks shown above
is a fair assessment of the principal and emerging risks for the remainder of
the financial year; and
· During the first six months of the current financial year, no
transactions with related parties have taken place which have materially
affected the financial position or the performance of the Company.
On behalf of the Board
Graham Oldroyd
Interim Chairman
14 December 2023
ENDS
A copy of the Half Year Report 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 Half Year Report for the six months ended 31 October 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
office, Cannon Place, 78 Cannon Street, London EC2N 6AG.
Neither the contents of the Company's website nor the contents of any website
accessible from hyperlinks on the Company's website (or any other website) is
incorporated into, or forms part of, this announcement.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
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. END IR DZLFFXLLBFBZ
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