Half-year Report

RNS Number : 7348W

BMO Global Smaller Companies PLC

13 December 2019

 

Date:                13 December 2019

Contact:          Peter Ewins                                                   

                        BMO Investment Business Limited                 

                        020 7628 8000                                               

BMO Global Smaller Companies PLC

Unaudited statement of results

for the half-year ended 31 October 2019

SUMMARY OF UNAUDITED RESULTS FOR THE HALF-YEAR ENDED 31 OCTOBER 2019

·    Net Asset Value with debt at market value ("NAV") increased to 142.43p*, giving a total return of 2.2% compared to the Benchmark total return of 0.5%

·    The share price ended the period at 133.6p*, delivering a total return of 0.1%

·    Interim dividend up by 10.0% to 0.55p per ordinary share reflecting strong income received from the portfolio

* Shareholders received ten new ordinary shares of 2.5p each in place of every ordinary share held on 30 October 2019. The NAV per share and share price have been adjusted to reflect the greater number of shares.

 

Manager's Review

Equity markets made some progress in the first half of the 2019/20 financial year, with a shift back to lower interest rates in the US lifting sentiment. There were headwinds however from the ongoing trade war between the US and China, the extended Brexit process plus a fairly synchronised weakening of global economic momentum. Investors tended to favour safer havens and as a consequence smaller company shares lagged the main indices in most of the key markets, maintaining the pattern from the prior financial year.

As the slowdown in growth impacted across a progressively wider set of stocks, the Company's investment portfolio was not immune to negative trends in corporate earnings data. Nevertheless, over the period the NAV still managed to post a modest gain, up by 2.2% on a total return basis. The Company's Benchmark (30% Numis UK Smaller Companies excluding investment companies Index/70% MSCI All Country World ex UK Small Cap Index) by comparison was up by 0.5%. Our outperformance was mainly due to strong stock selection in North America, where a defensive skew to the portfolio proved to be astute, with geographic asset allocation also making a positive contribution.

Just before the end of the accounting period, the Company completed a share split, meaning that shareholders received ten new ordinary shares of 2.5p each in exchange for each ordinary share of 25p held on 30 October 2019. This move is aimed at enhancing liquidity in the shares over the medium-term and to make investment through regular savings schemes easier. Adjusting for this change, the Company's shares delivered a total return of 0.1% over the six months, ending the period at a 6.2% discount versus 4.1% at the start of the period.

The Board continues to aim to keep the discount at below 5% in normal market conditions, with share buybacks the main tool utilised in the short-term. In line with the overall UK retail savings market background, a weaker trend in terms of saving scheme flows was evident for the Company's shares in the first half of the year. During the six-month period therefore, 10.6m shares on the new adjusted share capital basis, were bought back and placed into Treasury. Further buybacks have taken place since the end of October.

Dividends

Although there has been a slowdown in profit growth within stock markets, the majority of our holdings continued to perform satisfactorily and many have announced higher dividends. Revenue returns per share rose 17.2% and consequently the Board have decided to pay a dividend of 0.55p at the interim stage. This represents a 10.0% increase in the interim dividend and will be paid on 31st January 2020 to shareholders on the register on 3rd January 2020.

Market background

The period was marked by successive bouts of optimism and pessimism surrounding the state of talks on trade between the US and China. The general slowdown, most notably evidenced in industrial production and purchasing managers indices, fed through into lower bond market yields and growing expectations of policy response from Central Banks.

Over the six months the Federal Reserve Bank cut rates three times by 0.75% in response to the signs of slowdown and an absence of inflationary pressures in the US economy despite unemployment hitting new fifty-year lows. The Bank also signalled that it would again become a net buyer of Treasury bills. With economic data in mainland Europe notably weak, the European Central Bank ("ECB") moved its deposit rate further into negative territory to -0.5% and announced the recommencement of bond purchases from November 2019. Some of the larger Asian economies including India and Indonesia also reduced their interest rates in the period in response to a slowdown in growth and restrained inflation. Elsewhere, in China, the authorities announced a series of measures to support the local economy which has been buffeted by the impact of the US tariffs.

Sterling was weak over much of the period under review but rallied late on as the risk of a "no deal" Brexit sharp shock diminished. The UK economy stagnated through the summer with businesses unsurprisingly unwilling to commit to new investment with uncertainly remaining around the future trading relationship with Europe.

The environment of lower interest rates was supportive for the performance of certain rate sensitive sectors on global markets such as REITs and Utilities. Companies more exposed to cyclical markets, or those being impacted by the trade war within the Industrials and Energy sectors for example, tended to lag.

Regional portfolio performance

We report the performance of our regional/ country portfolios against the relevant local smaller company indices and a table depicting this is shown below. This clearly demonstrates that our North American portfolio had been well positioned for the market environment. We were also helped by more modest outperformance in Japan, which was the strongest performing market aside from the less significant in terms of scale Latin American small cap index. Our Rest of World portfolio, which mainly focuses on Asian markets, was also well ahead of the MSCI All Countries Asia Pacific ex Japan Small Cap Index. We had a tougher time closer to home in the UK and Europe, where our portfolio sector positioning and some individual stock selection issues worked against us.

Geographical performance (total return sterling adjusted)
for the half-year ended 31 October 2019
	Portfolio	Local smaller companies index
North America	+5.9%	-2.3%
UK	-3.4%	-1.8%
Europe	-0.3%	+1.9%
Japan	+8.9%	+8.7%
Rest of World	+1.4%	-2.0% (Asia Pacific ex Japan)  +9.1% (Latin America)
Source: BMO GAM

North America

We added value through stock selection most notably within the Financial, Energy, Technology and Materials sectors. A relatively low exposure to general industrial cyclical names exposed to the slowdown in manufacturing and global trade also helped relative performance.

Within Financials, we have long held an overweight exposure to insurance stocks, and in this period, this sector did very well, lifted by signs that pricing was on an improving trend across a number of lines. Property and casualty insurer Hallmark Financial Services reported much better underwriting results and its shares rose by 55.2%, while our largest individual company holding Alleghany also did well, helped by excellent returns on its investment portfolio. Insurance broker Brown & Brown was another strong performer, continuing its successful acquisitions programme and benefiting from the better rates. Real estate was strong as in other markets, and our holding in data centre operator CyrusOne rose as leasing activity picked up and the industry saw some consolidation.

In Energy, global fuel distributor World Fuel Services did well as management initiatives to focus on higher margin segments paid off. The company also benefited from some increased volatility in the oil price and looking forward is well placed to gain from new fuel regulations impacting the marine market to curb emissions. Avoiding any exposure to the hard pressed and generally over-levered North American oil production companies proved wise, as most of these stocks did badly.

In Technology, our holding in distributor CDW rose as it beat analysts' expectations and the shares were re-rated. We were helped by the merger of Total System Services with a larger payments processing peer, while shares in Amdocs bounced as an activist shareholder took a stake and the company reported some contract wins. Amdocs has some exposure to 5G which is also creating excitement in the shares of Viavi Solutions, a new holding in the portfolio. Viavi is a leading test and measurement player which should do well as the telecoms industry embarks upon a multi-year 5G capex cycle.

Within Materials, our decision to increase exposure to gold through holdings in Wheaton Precious Metals and SSR Mining paid off, as investors saw the merit in gold as a safe haven at a time of political uncertainty. In addition, Martin Marietta Materials, the aggregates and cement company outperformed as end markets across infrastructure, residential and non-residential construction markets improved, leading to better margins.

Other strong performers included sterilisation services company STERIS and Genesee & Wyoming. Investors continued to be attracted to the former's stable market and strong balance sheet which is allowing management to further extend the business's footprint. The latter was taken over by a private equity buyer at an acceptable price given weakening current trading performance as rail shipments have slowed quite markedly.

There were however, some stocks which disappointed on the portfolio. The agricultural sector is presently struggling as a result of weak commodity prices and the impact of the trade war. Our holding in The Andersons fell by 43.7%, as the company's ethanol unit was hit by industry overcapacity and the plant nutrient business was impacted by unhelpful weather conditions. Homewares retailer At Home Group's shares slumped after disappointing trading news and fears around leverage levels prompted us to sell our holding at a loss. We also decided to exit Healthcare Services Group given the company's continuing loss of business as management retreated from customers deemed to be too risky to serve. Utility company UGI's shares lagged as warm weather conditions led to lower gas and electricity demand.

We have started to add a few more cyclical names to the US portfolio where the recent downgrades have led to excessive share price reactions. These have been funded by taking profits in some of the higher rated stocks on the portfolio where the scope for positive surprises in the future seems more limited.

UK

The portfolio had a difficult six months, delivering a -3.4% return, with more than the usual number of stock specific issues impacting upon performance. Corporate earnings were under pressure from the global/domestic economic slowdown and as the delay to Brexit clarity weighed on business confidence and investment.

Among the weaker performers were several more cyclically exposed stocks including specialist foams producer Zotefoams, medical and industrial materials supplier Scapa Group and industrial fastenings distribution business Trifast. All three were hit by weaker demand patterns as the period progressed with operating leverage working in the wrong direction. Scapa also lost a material contract in its medical arm to compound its problems.

Shares in Ted Baker fell sharply after a weak trading update in June was followed by a very poor set of interim results. Unfortunately, the business has not been able to buck the general sluggish retail environment as it had done for many previous years. We decided to sell our holding in outdoor events equipment supplier Arena Events Group over concern on the company's financial position, while we also cut our losses in De La Rue after news emerged that the company was the subject of an SFO investigation. A new holding in gold miner Resolute Mining suffered as the company discovered equipment problems at its key mine in Mali, while property developer U and I Group slid, as development gains missed expectations and its retail orientated investment portfolio fell in value.

Takeover activity helped our performance in the period however, with four companies receiving bids; Entertainment One (Peppa Pig owner and television/film production business) and exhibitions company Tarsus Group within Media, plus plastic components business Synnovia and most recently Nigerian based Eland Oil & Gas. While we had held the first three for some time, we only bought into Eland Oil & Gas early in 2019.

Another good performer was Sirius Real Estate which owns mixed-use commercial real estate properties in Germany. The shares continued to be re-rated as it delivered upon its business model of raising occupancy and rents across its asset base targeting smaller local tenants with flexible lease terms. Debt purchase and management business Arrow Global Group rebounded from earlier weakness, while IPO from last year, legal business Knights Group continued to do well as it further expanded its presence by acquisition. Spirent Communications like Viavi Solutions in the US is benefiting from higher investment within the telecoms market and has also expanded its service capabilities for the US market.

We expect trading conditions for many UK small caps to remain tricky in the near term, but we have increased exposure to some domestically focused companies such as aggregates and bricks companies Breedon Group and Ibstock of late given relatively low valuations and their strong market positions.

The implications of the general election result on the portfolio will be assessed in the coming weeks.

Europe

Our portfolio in Europe was marginally down in the period with the slowdown on the Continent and global trade having an impact on a number of holdings. A lack of exposure to stronger performing sectors such as Real Estate also worked against us.

Performance within Financials was disappointing. Shares in Norwegian based life insurance, pensions and asset management business Storebrand gave back some of last year's gains. Falling bond market rates served to hit reported solvency levels, leading to less confidence for a step-up in future dividend payments. A fall in the share price of Norwegian bank Sparebank however, was offset by a rally in the share price of Danish based Ringkjoebing Landbobank; the latter still doing well in growing its customer numbers and increasing profits despite generally tough conditions for conventional banks due to the interest rate environment.

Some of the weaker performers came from perceived safer areas like food and beverages companies. Distributor Sligro Foods profits took a hit as increased systems costs and the integration of a large contract for Heineken proved more difficult than expected. Sausage skin business Viscofan's shares fell as the company guided down expectations, with Asian Swine Flu disrupting the market. Agronomy business Origin Enterprises' shares dropped despite generally solid results as wet weather led to a slow start to its new financial year. This company, like ferries business Irish Continental, is suffering as a consequence of the general uncertainty around Brexit.

As elsewhere, more cyclical companies were under pressure, with office equipment supplier Takkt having to take cost cutting measures in order to address weaker demand patterns. Automotive focused supplier Norma Group has issued three profit warnings in 2019 to date as margins have compressed and sales weakened, while construction lifts company Alimak's shares fell as optimism around business levels eroded, though pleasingly their aftermarket sales have continued to hold up.

Of the good performers in the period, semiconductor processing equipment supplier ASM International led the way, rising by 48.7% as sales and order growth both surpassed expectations. In Health care, diagnostic testing business DiaSorin rose as the market warmed to the company's prospects following a positive capital markets day, while packaging focused business Gerresheimer did well as margin gains under a new management team came through. Our long-term holding in German based combi-steamer cookers business Rational continued to pay off, with revenue growth and margins more than meeting hopes and the business continuing to take share in global markets. Another longer term holding, CTS Eventim, rose 18.9% as results beat expectations, with the company well placed to benefit amid a boom in the live entertainment market. Swimming pool consumables business Fluidra recovered following weakness at the start of 2019, with synergies from their major deal with a US peer from last year coming through.

Europe remains in a bit of a state of flux politically, with the fractious Brexit process not aiding the near-term outlook. We continue to see value within our portfolio, though it has been necessary to make a few changes to holdings where we have lost conviction in the investment case. Favourable resolution of the US/Chinese and US/European trade situations would be helpful, as would be fiscal stimulus, which is at long last now being considered in Germany. We expect monetary policy from the ECB to remain ultra-loose as the new head Christine Lagarde seeks to lift anaemic growth across the Continent.

Japan

The Japanese market outperformed the other regions in the six months, albeit after a weak previous year. Pleasingly we more than kept up with the recovery. Early in the period we started a holding in the Baillie Gifford Japanese Smaller Companies Fund. This is a growth orientated fund focusing on younger Japanese listed companies. It has a skew towards technology and medical companies and businesses using the internet to disrupt legacy markets. We believe that this complements our original two fund holdings managed by Aberdeen Standard and Eastspring, with a limited overlap of stocks.

Over the period under review, the best performance came from the Eastspring Investments Japan Smaller Companies Fund. This had struggled in 2018/19 as its value orientated investment approach had fallen out of favour, but more recently interest has come back for the lower rated part of the market.

Japan's economy like others has slowed and the near-term outlook does not look that exciting for corporate profits with many companies already having revised their expectations lower. We still see the potential for the market to outperform as we head towards 2020, when Japan will host the Olympics, which could drive increased interest from overseas investors.

Rest of World

Uncertainty around the trade outlook kept Asian markets on edge through the period and as the table on page 5 shows, small cap returns were negative. Our funds managed in total to record a modest gain of 1.4%. While the Rest of World for us covers a huge range of individual countries with very different economic and political dynamics, in overall terms Asian economies are continuing to grow, though the extent of their expansion has been slowing driven to varying degrees by the deceleration of the Chinese market. Hong Kong's recent problems are a worry with no end to the demonstrations seemingly yet in sight. Latin America markets were mixed. Brazil was strong, with progress on the political scene and some benefit from increased trade with China on the agricultural and wider resources side evident. On the other hand, Argentina once again saw its currency fall sharply, and more recently there has been unrest in Chile and Bolivia.

In terms of our portfolio, the best return came from our holding in the Australian New Horizons Fund. This has a bias towards growth stocks in Australia in the technology and medical areas, with a number of individual stock holdings driving strong performance in the period. Our long-established holding in the Utilico Emerging Markets trust was once again another positive contributor. This was due to good stock selection and its focus on areas less impacted by the trade war, with utility-like investments doing well as interest rates fell. The trust also benefited from a healthy exposure to Brazil. Since the period end, we have bought into another fund managed by Schroders. This new fund targets emerging markets smaller companies with high returns on a global basis.

Asset allocation

As already reported, asset allocation positioning made a positive contribution to the relative performance of the trust in the period, with the overweight to Japan and underweighting to the UK the main reasons for this. In terms of changes, we had pulled back our US exposure in early 2019 but the strength of our performance in this market meant that we ended the first half overweight once again. Given the better near-term outlook for the US compared to other developed market economies, this seems sensible for now ahead of any definitive resolution to the trade issues. The political uncertainty in the UK and slowdown in Europe led us to become less optimistic in relation to exposure to these markets. We stayed overweight to Japan and retained a broadly neutral stance towards the Rest of the World.

Geographical distribution of the investment portfolio
	Portfolio weighting
	31 October 2019 %	30 April 2019 %
North America	42.2	41.1
UK	24.8	26.1
Europe	11.6	12.0
Rest of World	11.1	11.2
Japan	10.3	9.6
Source: BMO GAM

Gearing

Gearing ended the period slightly higher at 5%. During the period, the Convertible Unsecured Loan Stock matured, with residual holdings converting into equity. After considering the various alternatives to replace this borrowing capacity, the Board decided to proceed with the issue of £35m private placing notes. These have a 20-year term and pay a fixed rate of 2.26%. This development, combined with drawings under an extended multi-currency £35m revolving credit facility (with an option to take on an additional £15m if required), provides the Company with an attractive blend of low cost fixed and floating facilities.

Outlook

As we look forward to the remainder of the year, geo-political issues continue to create uncertainties. We hope that some of these clear as time passes. A pause in trade hostilities would be particularly welcome given the risk of some countries falling back into technical recession in the absence of this. We expect near-term trading conditions to remain quite difficult for some of our companies, but low interest rates should continue to be supportive to equity market performance.

Peter Ewins

Lead Manager

12 December 2019

 

Unaudited Condensed Income Statement

for the half-year ended 31 October	2019			2018
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
Gains/(losses) on investments	-	15,167	15,167	-	(6,395)	(6,395)
Foreign exchange gains/(losses)	1	(217)	(216)	8	(456)	(448)
Income	8,064	-	8,064	6,819	-	6,819
Management fees	(539)	(1,616)	(2,155)	(541)	(1,621)	(2,162)
Other expenses	(694)	(10)	(704)	(425)	(14)	(439)
Net return before finance costs and taxation	6,832	13,324	20,156	5,861	(8,486)	(2,625)
Finance costs	(201)	(603)	(804)	(201)	(604)	(805)
Net return on ordinary activities before taxation	6,631	12,721	19,352	5,660	(9,090)	(3,430)
Taxation on ordinary activities	(487)	-	(487)	(465)	-	(465)
Net return attributable to shareholders	6,144	12,721	18,865	5,195	(9,090)	(3,895)
Return per share (basic) - pence(i)	1.02	2.10	3.12	0.87	(1.52)	(0.65)
Return per share (diluted) - pence(i)	n/a	n/a	n/a	0.86	(1.52)	(0.65)

⁽ⁱ⁾Comparative figures for the half-year ended 31 October 2018 have been restated due to the sub-division of each existing ordinary share of 25p into ten new ordinary shares of 2.5p each on 31 October 2019.

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 2019		Share	Capital	Equity			Total
	Share	premium	redemption	component	Capital	Revenue	shareholders'
	capital	account	reserve	of CULS	reserves	reserve	funds
	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
Balance at 30 April 2019	15,119	196,856	16,158	506	608,316	17,664	854,619
Movements during the half-year ended 31 October 2019
Dividends paid Shares repurchased by the Company and held in treasury Conversion of Convertible Unsecured Loan Stock ("CULS")	- - 394	- - 15,829	- - -	- - (506)	- (14,295) -	(6,894) - -	(6,894) (14,295) 15,717
Net return attributable to equity shareholders	-	-	-	-	12,721	6,144	18,865
Balance at 31 October 2019	15,513	212,685	16,158	-	606,742	16,914	868,012

Half-year ended 31 October 2018		Share	Capital	Equity			Total
	Share	premium	redemption	component	Capital	Revenue	shareholders'
	capital	account	reserve	of CULS	reserves	reserve	funds
	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
Balance at 30 April 2018	14,933	189,476	16,158	728	589,513	16,023	826,831
Movements during the half-year ended 31 October 2018
Dividends paid Shares issued Conversion of Convertible Unsecured Loan Stock ("CULS")	- 5 100	- 245 3,870	- - -	- - (127)	- - -	(5,973) - -	(5,973) 250 3,843
Net return attributable to equity shareholders	-	-	-	-	(9,090)	5,195	(3,895)
Balance at 31 October 2018	15,038	193,591	16,158	601	580,423	15,245	821,056

Year ended 30 April 2019		Share	Capital	Equity			Total
	Share	premium	redemption	component	Capital	Revenue	shareholders'
	capital	account	reserve	of CULS	reserves	reserve	funds
	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s	£'000s
Balance at 30 April 2018	14,933	189,476	16,158	728	589,513	16,023	826,831
Movements during the year ended 30 April 2019
Dividends paid	-	-	-	-	-	(8,982)	(8,982)
Shares repurchased by the Company and held in treasury	-	-	-	-	(2,001)	-	(2,001)
Shares issued	13	632	-	-	-	-	645
Conversion of Convertible Unsecured Loan Stock ("CULS")	173	6,748	-	(222)	-	-	6,699
Net return attributable to equity shareholders	-	-	-	-	20,804	10,623	31,427
Balance at 30 April 2019	15,119	196,856	16,158	506	608,316	17,664	854,619

 

Unaudited Condensed Balance Sheet

	31 October 2019	31 October 2018	30 April 2019
	£'000s	£'000s	£'000s
Fixed assets
Investments	910,915	862,244	893,548
Current assets
Debtors	1,998	3,867	1,631
Cash and cash equivalents	12,790	12,709	12,135
Total current assets	14,788	16,576	13,766
Creditors: amounts falling due within one year
Bank loans	(17,726)	(34,745)	(34,052)
Creditors	(4,965)	(4,800)	(3,094)
Convertible Unsecured Loan Stock ("CULS")	-	-	(15,549)
Total current liabilities	(22,691)	(39,545)	(52,695)
Net current liabilities	(7,903)	(22,969)	(38,929)
Total assets less current liabilities	903,012	839,275	854,619
Creditors: amounts falling due after more than one year
Convertible Unsecured Loan Stock ("CULS")	-	(18,219)	-
Loan notes	(35,000)	-	-
Net assets	868,012	821,056	854,619
Capital and reserves
Called-up share capital	15,513	15,038	15,119
Share premium account	212,685	193,591	196,856
Capital redemption reserve	16,158	16,158	16,158
Equity component of CULS	-	601	506
Capital reserves	606,742	580,423	608,316
Revenue reserve	16,914	15,245	17,664
Total shareholders' funds	868,012	821,056	854,619
Net asset value per share (basic) - pence(i)	142.65	136.50	141.67
Net asset value per share (diluted) - pence(i)	n/a	135.32	140.57

⁽ⁱ⁾ Comparative figures for the half-year ended 31 October 2018 and year ended 30 April 2019 have been restated due to the sub-division of each existing ordinary share of 25p into ten new ordinary shares of 2.5p each on 31 October 2019.

 

Unaudited Condensed Statement of Cash Flows

	Half-year ended	Half-year ended
	31 October 2019	31 October 2018
	£'000s	£'000s
Cash flows from operating activities before dividends received and interest paid	(3,340)	(2,714)
Dividends received	8,616	7,335
Interest paid	(773)	(704)
Cash flows from operating activities	4,503	3,917
Investing activities
Purchases of investments	(113,498)	(154,292)
Sales of investments	112,730	150,992
Other capital charges	(8)	(13)
Cash flows from investing activities	(776)	(3,313)
Cash flows before financing activities	3,727	604
Financing activities
Ordinary dividends paid	(6,894)	(5,973)
Proceeds from issue of shares	-	250
Cash flows from share buybacks for treasury shares	(14,636)	-
Movement on loans	18,611	10,483
Cash flows from financing activities	(2,919)	4,760
Net movement in cash and cash equivalents	808	5,364
Cash and cash equivalents at the beginning of the period	12,135	7,532
Effect of movement in foreign exchange	(153)	(187)
Cash and cash equivalents at the end of the period	12,790	12,709
Represented by:
Cash at bank	4,207	1,348
Short term deposits	8,583	11,361
Cash and cash equivalents at the end of the period	12,790	12,709

 

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 revised Statement of Recommended Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts" (SORP) issued by the AIC in October

2019.

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 2019.

2    Dividend

The Directors have declared an interim dividend in respect of the year ending 30 April 2020 of 0.55p per share, payable on 31 January 2020 to all shareholders on the register at close of business on 3 January 2020. The amount of this dividend will be £3,340,000 based on 607,225,402 shares in issue at 10 December 2019. This amount has not been accrued in the results for the half-year ended 31 October 2019.

3    Results

The results for the half-year ended 31 October 2019 and 31 October 2018, 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 2019; 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 2019 are an extract from those accounts.

The report and accounts for the half-year ended 31 October 2019 will be posted to shareholders and made available on the website www.bmoglobalsmallers.com shortly. Copies may also be obtained from the Company's registered office, Exchange House, Primrose Street, London EC2A 2NY.

Legal Entity Identifier: 2138008RRULYQP8VP386

By order of the Board

BMO Investment Business Limited, Secretary

Exchange House, Primrose Street, London EC2A 2NY

12 December 2019

 

Directors' Statement of Principal Risks and Uncertainties

The Company's principal risks and uncertainties are described in detail under the heading "Principal risks and future prospects" within the strategic report in the Company's annual report for the year ended 30 April 2019.

The risks include having an inappropriate strategy in relation to investor needs; failure on the part of the Manager to continue to operate effectively; unfavourable markets or inappropriate asset allocation, sector and stock selection and currency exposure and use of gearing leading to investment underperformance and its effect on share price discount/premium and dividends.  Also included are risks in relation to errors, fraud or control failures at service providers, or loss of data through cyber-threats or business continuity failure.

In the view of the Board, these risks and uncertainties are applicable to the remainder of the financial year, as they were to the six months under review.

Statement of Directors' Responsibilities in Respect of the Half-Yearly 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-yearly 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 Risks and Uncertainties shown above is a fair review of the principal risks and uncertainties for the remainder of the financial year; and

·       the half-yearly report includes a fair review of the related party transactions that have taken place in the first six months of the financial year.

On behalf of the Board

Anthony Townsend

Chairman

12 December 2019

 

END

 

 

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