Global Smlr Cos.Tst - Half-year Report and Dividend Announcement
17/12/2024 07:00
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RNS Number : 2915Q Global Smaller Cos. Trust PLC (The) 17 December 2024
LONDON STOCK EXCHANGE ANNOUNCEMENT
The Global Smaller Companies Trust PLC
Unaudited Statement of Results
for the half year ended 31 October 2024 and Interim
dividend announcement
Legal Entity Identifier: 2138008RRULYQP8VP386
Information disclosed in accordance with Disclosure Guidance and Transparency
Rule 4.2
SUMMARY OF UNAUDITED RESULTS FOR THE HALF YEAR ENDED 31 OCTOBER 2024 AND
INTERIM DIVIDEND ANNOUNCEMENT
· Net Asset Value ("NAV") with debt at fair value increased to 180.8p
per share, giving a total return of 2.7% compared to the Benchmark total
return of 5.7%.
· The share price ended the period at 160.6p, delivering a total return
to shareholders of 1.6%.
· The Board announces an interim dividend in respect of the financial
year to 30 April 2025 of 0.70p per ordinary share. This dividend is payable
on 23 January 2025 to shareholders on the register on 27 December 2024, with
an ex dividend date of 24 December 2024.
· Interim dividend increased by 2.9% to 0.70p per ordinary share.
Date: 17 December 2024
Contact: Nish
Patel
Columbia Threadneedle
Investment Business Limited
020 7464 5000
Chairman's Review
Throughout the first half of the financial year to 30 April 2025, market
participants continued to focus on trends in economic growth, inflation and
geopolitical developments. Despite a rapid rise in interest rates, major
economies appeared to be on course for a 'soft landing', while welcome falls
in the level of inflation allowed several major central banks to begin cutting
interest rates, including the US Federal Reserve, the European Central Bank
and the Bank of England. Whether inflation will continue to fall remains to be
seen. Conversely, persistent inflation in Japan prompted the central bank to
raise interest rates modestly from their very low levels. Geopolitical
tensions and uncertainty persisted over the six-month period, with the US
election attracting much attention though ending up more conclusive than
predicted. The UK produced a decisive election result, however the new
government's growth agenda faces significant budgetary challenges. Sadly, the
war between Russia and the Ukraine showed no signs of ending and the conflict
in the Middle East spread.
Smaller company equities rallied in the six months ended 31st October 2024.
North America was the strongest region (up by 8.6%) and, after a lacklustre 2
years, UK smaller companies showed signs of life, rising by 5.7% in the
period. European markets were sluggish and the Asian countries within the
Emerging Markets rose whilst those in Latin America showed weakness. Japan
recovered after an unexpected hike in interest rates in early August led to
the Japanese market suffering from its largest single day decline since the
Black Monday stock market crash in October 1987.
Our investment portfolio in overall terms was behind the Company's Benchmark
(80% MSCI All Country World ex UK Small Cap Index (net)/20% Deutsche Numis UK
Smaller Companies (excluding investment companies) Index). Taking the
Company's long-term liabilities at fair value, the NAV per share rose to
180.8p, a 2.7% total return for the six months, compared to a return of 5.7%
from the Benchmark.
Along with the Investment Company sector, the Company's discount widened,
ending the period at 11.2%. The share price rose by 0.3% in the six months to
160.6p, or by 1.6% in total return terms. The Board continued to use its
buyback powers actively, and since the final quarter of the last financial
year, the level of activity has been at a higher level. 26.6m shares were
repurchased for treasury over the six months under review at an average
discount to NAV of 9.7%, enhancing the NAV by 0.6% in the process. This
compares to 30.2m shares which were repurchased in the year to 30 April 2024.
In addition, the Company continued its marketing efforts in order to attract
buyers of its shares.
Dividends
Revenue returns per share rose by 9.0%, in comparison to the six months to 31
October 2023. As a consequence, the Board decided to increase the interim
dividend by 2.9% to 0.70p per share. Shareholders on the register on 27
December 2024 will receive this dividend on 23 January 2025.
Investment team changes
When Columbia Threadneedle Investments acquired Bank of Montreal's EMEA asset
management business (BMO GAM (EMEA)) in November 2021, the investment team
responsible for managing the Company's portfolio successfully transitioned to
Columbia Threadneedle Investments, ensuring a seamless transition of the
Company's investment approach. Nish Patel was appointed as lead manager of the
portfolio in May this year following Peter Ewins' retirement. Nish, a senior
team member since 2007, brings deep expertise and continuity to the
portfolio's management. As part of Columbia Threadneedle Investments'
integration of the acquired BMO business, some adjustments were made to the
team supporting the lead manager, involving a combination of new appointments
and departures. These changes are a natural part of the integration process
and reflect Columbia Threadneedle Investments' commitment to strengthening
resources to support the Company's long term investment objectives.
Shareholders can be confident that the Company's established investment
philosophy and approach remain unchanged under Nish's leadership. On behalf of
the Company, we would like to express our gratitude to those team members who
have moved on for their valuable contributions and wish them every success in
the future.
Board Changes
Following the Annual General Meeting on 13 August 2024, Jo Dixon retired from
the Board. Jo was the Chairman of the Audit and Management Engagement
Committee and Senior Independent Director and following her retirement Nick
Bannerman and Graham Oldroyd were appointed to these roles respectively. As
part of its succession plan, and having followed a formal recruitment process,
the Board was pleased to appoint Zoe King as a non-executive Director with
effect from 12 December 2024.
Anja Balfour
Chairman
16 December 2024
Lead Manager's Review
Market background
In the US, the economy was supported by a robust services sector. A resilient
labour market underpinned consumer confidence, although signs of stress did
emerge within the lower income cohort and this led to some earnings
disappointments from consumer facing companies. Global manufacturing has been
in the doldrums for almost two years now. Encouragingly though, recent data
showed signs of stabilisation in the UK and China. Germany struggled,
especially its auto sector because of sluggish demand in the face of lower
subsidies for electric vehicles and increased competition from Chinese
imports. Growth remained strong in India. In China, the malaise in the
property sector spread to the consumer and this necessitated vast amounts of
fiscal and monetary intervention by the authorities in order to lift
sentiment.
Employment across most countries weakened a little but still remained healthy.
With inflation coming down, central banks started to cut interest rates and
bond yields fell initially, providing welcome relief to the more interest rate
sensitive parts of the world economy such as housing. As the Federal Reserve
grew confident that inflation was normalising it cut the US interest rate by
0.5% in September in order to maintain a healthy labour market. The pace at
which interest rates were expected to change differed by region and this led
to significant movements in currencies with the Japanese Yen and British Pound
strengthening over the period and the Euro and US Dollar weakening.
Equity markets delivered strong returns over the six months, once again
dominated by large caps, although small caps did show signs of life with
strong outperformance in the month of July. Growth stocks led the market again
as bond yields fell. Commodity markets were mixed with industrial metals
weaker, oil volatile and gold up on the prospect of lower interest rates. The
best performing sectors were technology, communication services and utilities.
The laggards were energy, materials and consumer staples.
Corporate earnings were on the whole better than sell side analyst forecasts,
however this outperformance often did not result in share price appreciation,
indicating high expectations from investors. Equity market valuations of
smaller companies expanded over the period, but not as much as their larger
counterparts. Credit spreads of corporate bonds tightened to very narrow
levels, particularly for the least credit worthy borrowers.
Regional portfolio performance
The table below shows how the different geographical regional portfolios
performed over the period versus the local smaller companies comparator
indices, with all return numbers measured in Sterling.
Geographical performance (total return sterling adjusted)
for the half year ended 31 October 2024
Portfolio
Local smaller companies index
North America +7.2% +8.6%
UK -4.2% +5.7%
Europe -0.6% -0.9%
Japan +1.8% +1.9%
Rest of World +2.0% +3.9% (Asia Pacific ex Japan)
-14.3% (Latin America)
Source: Columbia Threadneedle Investments
North America
In North America, smaller companies as measured by the MSCI North America
Small Cap index (net) delivered an 8.6% return in sterling terms. This would
have been greater had it not been for the weakening of the Dollar against
Sterling over the six month period. Our portfolio's 7.2% total return was 1.4
percentage points behind the index. From a sector perspective, positive stock
selection in industrials and energy was offset by adverse stock selection in
information technology and financials.
Curtiss-Wright, a producer of critical components for a range of industrial
markets, saw very good growth in its defence electronics and nuclear
divisions. The Ensign Group has been held by the Company for a number of
years. This operator of healthcare facilities delivered good results with
momentum in occupancy, acuity and earnings. Organic revenue growth at
insurance broker Brown & Brown was supported by rising insurance rates,
new business wins and stable retention. A healthy investment banking backdrop,
strong capital markets activity and market share gains helped to lift the
shares of diversified financial services company Jefferies Financial Group.
Precious metals streaming company Wheaton Precious Metals rose with the gold
price and announced a deal to finance a project in the Ivory Coast. Recent
addition to the portfolio Jones Lang LaSalle delivered outperformance. This
provider of real estate services was helped by a return to growth of the
company's transaction services business, in part driven by falling interest
rates. Frontdoor, a provider of home warranty plans, remained resilient in a
sluggish housing market. The company raised its profitability through various
pricing initiatives, generation of additional service fee income and process
improvements.
On the negative side, value added technology reseller CDW endured a slowdown
in spending by customers on large projects and increased price competition in
the industry. Auto parts distributor LKQ Corp was challenged by lower
repairable claims as insurance prices rose and used car values fell. In
addition, the company's Specialty segment saw continued weakness in the
recreational vehicle market. Oil and gas exploration and production company
Kosmos Energy fell with the oil price. Furthermore, production guidance was
lowered because of disappointing performance from one of the company's assets
and delays in the start-up of a new project. Shares of payments processor WEX
lagged because of weaker volumes and a lower fuel price in its Mobility
business and the migration of a large travel customer to a new contract in its
Corporate Payments segment. US Physical Therapy, an operator of outpatient
physical therapy clinics, suffered from the industry wide shortage of labour
and consequently reported higher than expected costs. The ongoing inventory
correction in the semiconductor industry led to disappointing results from
diversified chip producer MaxLinear. Purchaser of charged off receivables PRA
Group was the subject of concerns over a deceleration in supply of defaulted
credit card debt.
UK
The UK smaller companies market generated a respectable return in the
six-month period, rising 5.7%. Disappointingly, the portfolio lagged the local
index and fell by 4.2%. A noticeable trend in the UK stock market in the
period was the underperformance of the Alternative Investment Market (AIM)
with these shares as measured by the FTSE AIM All Share Index falling by 2.1%
in total return terms, mostly because of fears over the removal of inheritance
tax relief on these investments. At the start of the period the UK portfolio
had 24% of its assets invested in AIM quoted shares.
On the positive side, defence services company QinetiQ Group was helped by
strong growth in its European business. Encouragingly, the company also
reported good progression in orders and switched its capital allocation focus
away from M&A and towards share repurchases. Online classifieds platform
Baltic Classifieds Group announced solid results and the shares rerated as
concerns over the company's exposure to the war in Ukraine subsided. Financial
services provider Just Group has been a beneficiary of the growth of the bulk
annuities sector. In the period the company continued to increase its market
share in this area. Media and consultancy services company Ascential received
a takeover bid from Informa at a 53% premium. The new CEO at identity
verification and fraud prevention software business GB Group outlined a
sensible strategy to simplify the company's structure, product offering and
marketing plan. In addition, demand improved at GB Group's identity business.
Optimism grew that the newly elected Labour government would help spur a
multi-year recovery in volumes sold at construction materials business Breedon
Group and the shares were upgraded by a broker. Also in the construction
industry, ground engineering specialist Keller Group benefitted from a strong
North American infrastructure market and management's actions to improve the
company's operational performance.
There were stock specific challenges in the portfolio with marketing company
Next 15 Group reporting weaker than expected earnings because of softness in
its technology and government divisions. Additionally, the company suffered
from a contract loss from a large client. It was frustrating to see Ashtead
Technology Holdings underperform. This rental company to the oilfield services
industry delivered good results but fell because of a lower oil price and
uncertainty over the new UK government's position towards drilling in the
North Sea. Investors became a little nervous that distributor of food and
confectionary Kitwave Group would find it difficult to meet analysts'
financial forecasts for the year given adverse weather and the company's
investment in growth initiatives. Producer of electronic components TT
Electronics saw end market weakness for its products and faced operational
issues in its US business and this led to a profit warning. Similarly, weak
demand and destocking led to a profit warning from gaming technology company
Nexteq. Investment company Mercia Asset Management lagged along with the
sector as it wrestled with a difficult fund-raising environment. Producer of
promotional products 4imprint Group suffered from sluggish demand from new
customers.
Europe
The European smaller companies market was down slightly in the period, falling
0.9%. The return of our portfolio was marginally better than the local index.
Good stock selection in consumer discretionary and industrials was pulled down
a little by unfavourable stock selection in healthcare and technology.
Information services business Karnov Group was the subject of takeover
interest from private equity. Accelleron Industries is a Swiss business that
specialises in the manufacture and servicing of turbochargers for customers in
a wide range of sectors. In the period the company delivered strong organic
revenue growth, particularly in its marine and energy businesses. Analysts
lifted their earnings forecasts for pharmaceutical ingredients business
Siegfried as prices rose, new production came online in Spain and costs were
cut. Events and ticketing company CTS Eventim's earnings were lifted by the
Paris Olympics and Paralympics. Furthermore, the company secured contracts for
recently announced music tours and corporate events. Amidst an industry
slowdown swimming pool equipment manufacturer Fluidra outperformed its
competitors in the US and its shares rallied 26%. Engcon manufactures
components for construction machinery. The company reported good order growth
in Europe and expansion of its profit margin as a greater proportion of its
sales came from higher value products. In recent years helmet technology
company MIPS has suffered from the downturn in the bicycle market, however,
earnings now seem to be recovering, helped in part by normalisation of
customer inventories.
Detractors included Stabilus, the German manufacturer of gas springs, dampers
and electromechanical drives. The company reduced its financial forecasts
because of weakness in the automotive and commercial vehicle markets. Tecan, a
Swiss laboratory automation business, suffered from sluggishness in its
Chinese business and deferrals of customer orders. Davide Campari-Milano was
affected by concerns over a weaker consumer market and regulatory issues in
China. Schoeller-Bleckmann, the Austrian provider of drill bits to the oil and
gas industry, fell with the oil price. As well as this, increased competition
in the US dampened the company's profitability. Gerresheimer specialises in
drug packaging and drug delivery systems. As demand normalised after the
pandemic, inventories were reduced across the company's customer base and this
led to a profit warning. French industrial technology software business Lectra
reported lower orders for new equipment. Sdiptech, which provides technology
for public infrastructure, stumbled after reporting lower profit margins and
the departure of some of its management team.
Japan
The MSCI Japan Small Cap Index was up 1.9% in the six-month period. It was
very pleasing to see our internally managed portfolio deliver good
performance, with this part of the Company's investments outperforming its
benchmark. Stock selection was very good in information technology and
consumer discretionary and unfavourable in consumer staples.
Toy and game manufacturer Tomy reported strong domestic sales growth, helped
by new products and releases. The company also revealed ambitious long term
financial targets. Building products specialist Sanwa Holdings announced
better than expected profits in its Americas business because of a resilient
pricing environment and cost cutting. Investors also anticipated an
improvement in capital allocation at the company after a prominent activist
fund took a stake in the business. The demand outlook for wire and cable
manufacturer SWCC's products continued to strengthen because of increased
investment in Japan's power infrastructure. Same-store sales growth at
retailer PAL Group accelerated, particularly through the company's e-commerce
channel. Investors grew optimistic about the future prospects of IT services
provider WingArc1st's artificial intelligence platform. Gaming and
entertainment equipment manufacturer Sankyo reported strong sales and profit
growth over the period with good customer retention and strong sales of newer
titles that typically command higher margins. Construction products specialist
Nichias revealed strong demand across its customer base and potential
stabilisation in its semiconductor related business.
Detractors included diversified trading house Sojitz, which made slow progress
towards its annual earnings target because of lower production volumes in its
metals and minerals business. Technical factors related to an index
rebalancing created pressure on the shares of flow control equipment maker
Ebara. Auto component producer Niterra was caught up in the negative sentiment
that is currently engulfing the auto sector. In anticipation of an interest
rate increase by the Bank of Japan, investors took profits in diversified
property business Nomura Real Estate Holdings. Similarly, profits were taken
in regional bank Nishi-Nippon Financial Holdings as market volatility and a
stronger Japanese Yen reduced the likelihood of another interest rate hike in
the near term. Pharmacy store operator QOL Holdings suffered from government
led revisions to drug prices. Home interior products company Sangetsu was hurt
by higher raw material, logistics and personnel costs.
Eastspring Investments Japan Smaller Companies Fund delivered a total return
that was behind the benchmark because of adverse stock selection in the
telecommunications sector.
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 produced a reasonable return over the
six-month period, although performance was quite widely dispersed between the
different countries. India once again led the pack, closely followed by
Indonesia. China showed signs of stabilising, whilst Latin America and Korea
struggled.
Performance was mixed across the funds. The Scottish Oriental Smaller
Companies Trust outperformed in the period, helped by strong stock selection
in India. After the period end this company's lead manager departed and was
replaced by his long-standing deputy. We have been reassured that there will
be continuity in the company's investment approach and that it remains very
well resourced. After a period of improving performance, Schroder ISF Global
Emerging Markets Smaller Companies Fund was very slightly behind its
benchmark. Utilico Emerging Markets Trust was challenged by a very weak market
backdrop in Latin America, where the fund is overrepresented. In addition,
this trust's discount widened in the period. Pinebridge Asia ex Japan Small
Cap Fund suffered from its underweight position in India, as well as some
stock selection issues in Taiwan.
Asset allocation
The table below shows the exposure of the portfolio across the different
markets. Over the period, our exposure to North America increased, whilst the
UK and Europe came down reflecting purchase and sale activity in the period.
Asset allocation had very little effect on performance relative to the
benchmark over the six-month period, with attribution from the Company's
overweight position in the UK offset by its underweight stance in North
America.
Geographical distribution of the investment portfolio
Portfolio weighting
31 October 2024 30 April 2024
% %
North America 45.2 40.8
UK 20.0 24.7
Rest of World 14.1 13.5
Europe 10.7 11.5
Japan 10.0 9.5
Source: Columbia Threadneedle Investments
Gearing
Gearing ended the six months at 4.1%, slightly down on the 4.7% at the end of
April 2024, as we continue to take a cautious approach to the use of leverage
for now.
Outlook
Similar to the UK, inflation proved to be a key issue in the US election.
Voters opted for change and this resulted in a clear victory for Donald Trump
and the Republican party. Given the wide range of potential policy changes
ahead, markets will be sensitive to the substance, severity and sequencing of
the fiscal, trade and immigration policies of the incoming US administration,
all of which may drive different investment outcomes. Growth outside of the US
is likely to be better in calendar year 2025 than in 2024, however, US imposed
tariffs are a clear risk to this. A macro environment with moderate growth,
falling inflation, monetary policy easing and potential deregulation should be
supportive for risk assets in general.
Inflation has come down significantly, however, expansionary fiscal policies,
tight labour markets, ongoing wars and plans to restrict immigration and trade
all have the potential to rouse inflation. This would present a dilemma to
central banks. Rising fiscal deficits have been talked about for many years.
With the recent rise in government bond yields despite the start of an
interest rate cutting cycle we may be reaching the point where fiscal deficits
do start to matter.
There are many uncertainties today, yet we have seen the valuation of equities
expand and spreads on corporate bonds narrow. It looks like complacency is
setting in and so we think it is right to proceed with caution but to take
advantage of any opportunities that present themselves.
Nish Patel
Lead Manager
16 December 2024
Unaudited Condensed Income Statement
for the half year ended 31 October 2024 2023
Revenue Capital Total Revenue Capital Total
£'000s £'000s £'000s £'000s £'000s £'000s
Gains/(losses) on investments - 13,302 13,302 - (62,221) (62,221)
Foreign exchange (losses)/gains (51) 208 157 4 (305) (301)
Income 8,913 1,468 10,381 8,897 66 8,963
Management fees (543) (1,630) (2,173) (517) (1,551) (2,068)
Other expenses (625) (16) (641) (715) (21) (736)
Net return before finance costs and taxation 7,694 13,332 21,026 7,669 (64,032) (56,363)
Finance costs (197) (591) (788) (194) (582) (776)
Net return on ordinary activities before taxation
7,497 12,741 20,238 7,475 (64,614) (57,139)
Taxation on ordinary activities (528) - (528) (569) - (569)
Net return attributable to shareholders 6,969 12,741 19,710 6,906 (64,614) (57,708)
Return per share - pence 1.45 2.65 4.10 1.33 (12.43) (11.10)
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 2024 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 2024 15,513 212,639 16,158 605,607 20,145 870,062
Movements during the
half year ended
31 October 2024
Dividends paid - - - - (10,304) (10,304)
Shares repurchased by the Company and held in treasury
- - - (43,897) - (43,897)
Net return attributable to equity
shareholders - - - 12,741 6,969 19,710
Balance at 31 October 2024 15,513 212,639 16,158 574,451 16,810 835,571
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
Year ended 30 April 2024
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 year
ended 30 April 2024
Dividends paid - - - - (12,186) (12,186)
Shares repurchased by the Company and held in treasury
- - - (44,777) - (44,777)
Net return attributable to equity
shareholders - - - 53,030 14,560 67,590
Balance at 30 April 2024 15,513 212,639 16,158 605,607 20,145 870,062
Unaudited Balance Sheet
31 October 2024 31 October 2023 30 April 2024
£'000s £'000s £'000s
Fixed assets
Investments 869,837 813,434 910,498
Current assets
Debtors 55,901 1,920 6,446
Cash and cash equivalents 9,687 15,777 11,021
Total current assets 65,588 17,697 17,467
Creditors: amounts falling due within one year
Bank loans (16,212) (17,033) (16,463)
Creditors (48,642) (1,333) (6,440)
Total current liabilities (64,854) (18,366) (22,903)
Net current assets/(liabilities) 734 (669) (5,436)
Total assets less current liabilities 870,571 812,765 905,062
Creditors: amounts falling due after more than one year
Loan notes (35,000) (35,000) (35,000)
Net assets 835,571 777,765 870,062
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 574,451 517,492 605,607
Revenue reserve 16,810 15,963 20,145
Total shareholders' funds 835,571 777,765 870,062
Net asset value per share (debt at par value) - pence
178.48 151.27 175.88
( )
Unaudited Condensed Statement of Cash Flows
Half year ended Half year ended
31 October 2024 31 October 2023
£'000s £'000s
Cash flows from operating activities before dividends received and interest
paid
(1,964) (2,901)
Dividends received 9,918 9,926
Interest paid (768) (783)
Cash flows from operating activities 7,186 6,242
Investing activities
Purchases of investments (66,720) (84,035)
Sales of investments 113,237 115,449
Cash flows from investing activities 46,517 31,414
Cash flows before financing activities 53,703 37,656
Financing activities
Ordinary dividends paid (10,304) (8,714)
Cash flows from share buybacks for treasury shares (44,639) (15,162
Cash flows from financing activities (54,943) (23,876)
Net movement in cash and cash equivalents (1,240) 13,780
Cash and cash equivalents at the beginning of the period 11,021 2,292
Effect of movement in foreign exchange (94) (295)
Cash and cash equivalents at the end of the period 9,687 15,777
Represented by:
Cash at bank 3,220 3,037
Short term deposits less than 3 months 6,467 12,740
Cash and cash equivalents at the end of the period 9,687 15,777
Unaudited Notes on the Condensed Financial Statements
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 2024.
2 Return per share
Basic returns per share attributable to ordinary shareholders are based on the
following data.
Half Year ended Half year ended Year ended
31 October 2024 31 October 2023 30 April 2024
£'000s £'000s £'000s
Revenue return attributable to shareholders - £'000s 6,969 6,906 14,560
Capital return attributable to shareholders - £'000s 12,741 (64,614) 53,030
Total return attributable to shareholders - £'000s 19,710 (57,708) 67,590
Revenue return per share - pence 1.45 1.33 2.84
Capital return per share - pence 2.65 (12.43) 10.33
Total return per share - pence 4.10 (11.10) 13.17
Weighted average number of ordinary shares in issue 481,649,140 519,780,986 513,545,620
during the period
3 Dividend
The Directors have declared an interim dividend in respect of the year ending
30 April 2025 of 0.70p per share, payable on 23 January 2025 to all
shareholders on the register at close of business on 27 December 2024. The
amount of this dividend would be £3,244,000 based on 463,386,347 shares in
issue at 13 December 2024. This amount has not been accrued in the results for
the half year ended 31 October 2024.
4 Share capital
Shares held in Shares entitled Total shares Issued and fully
treasury to dividend in issue paid nominal
Equity share capital Number Number Number £'000s
Ordinary shares of 2.5p each
Balance at 30 April 2024 125,835,954 494,697,816 620,533,770 15,513
Shares repurchased by the Company and held in treasury 26,550,257 (26,550,257) - -
Balance at 31 October 2024 152,386,211 468,147,559 620,533,770 15,513
During the half year ended 31 October 2024, 26,550,257 ordinary shares were
repurchased and held in treasury incurring a cost of £43,897,000. Since the
period end up to 13 December 2024 a further 4,761,212 ordinary shares have
been bought back and held in treasury, costing £7,875,000.
5 Net asset value per ordinary share
31 October 2024 31 October 2023 30 April 2024
NAV with debt at par value
Net assets attributable at the period end - £'000s 835,571 777,765 870,062
Number of ordinary shares in issue at the period end 468,147,559 514,160,164 494,697,816
Net asset value per share with debt at par value - pence 178.48 151.27 175.88
31 October 2024 31 October 2023 30 April 2024
NAV with debt at fair value
Net assets attributable at the period end - £'000s 835,571 777,765 870,062
Add back: Debt as par - £'000s 51,212 52,033 51,463
Deduct: Debt at fair value - £'000s (40,388) (39,668) (40,608)
Net assets with debt at fair value - £'000s 846,395 790,130 880,917
Number of ordinary shares in issue at the period end 468,147,559 514,160,164 494,697,816
Net asset value per share with debt at fair value - pence 180.80 153.67 178.07
6 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 facilities, 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.
7 Transactions with related parties and the Manager
The Board of Directors is defined as a related party. Under the FCA UK Listing
Rules, the Manager is also defined as a related party. However, the existence
of an independent Board of Directors demonstrates that the Company is free to
pursue its own financial and operating policies and therefore under the AIC
SORP, the Manager is not considered a related party for accounting purposes.
The Directors receive aggregated remuneration for services as Directors and
for which there were no outstanding balances at the period end. There have
been no transactions with related parties during the first six months of the
current financial year that have materially affected the financial position or
performance of the Company during the period and there have been no changes in
the related party transactions described in the last Annual Report and
Financial Statements that could do so.
Management fees to the Manager are set out in note 3 and note 9 in the Half
Year Report, where accrued management fees are disclosed.
8 Results
The results for the half year ended 31 October 2024 and 31 October 2023, which
are unaudited and which have not been reviewed by the Company's auditor
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 2024; the report of the auditor 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 2024 are an
extract from those financial statements.
By order of the Board
Columbia Threadneedle Investment Business Limited, Company Secretary
Cannon Place, 78 Cannon Street, London EC2N 6AG
16 December 2024
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 2024. They include:
· 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.
· 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.
· 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 a significant rise in inflation could lead to 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. The Board has also considered the
outlook for inflation and ongoing macroeconomic and geopolitical concerns.
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 6.
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 Chairman's Review, Lead Manager's Review and the Directors'
Statement of Principal and Emerging Risks (together constituting the Interim
Management Report) includes a fair review of the information required by the
Disclosure Guidance and Transparency Rule ("DTR") 4.2.7R. being an indication
of 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
· The Half Year Report includes a fair review of the information
required by DTR 4.2.8R, being related party transactions that have taken place
in the first six months of the current financial year and that have materially
affected the financial position or performance of the Company during that
period, and any changes in the related party transactions described in the
last Annual Report that could do so.
On behalf of the Board
Anja Balfour
Chairman
16 December 2024
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 2024 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 UNRBRSRUUAAA
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