TIDMBGSC
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-YEARED 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
Local smaller companies
Portfolio 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 30 April
2019 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 GBP35m 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 GBP35m revolving credit facility (with an option to
take on an additional GBP15m 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
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'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
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'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
- - - - - (6,894) (6,894)
Dividends paid
Shares repurchased by the - - - - (14,295) - (14,295)
Company and held in treasury
Conversion of Convertible
Unsecured Loan Stock ("CULS") 394 15,829 - (506) - - 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
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'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 - - - - - (5,973) (5,973)
Shares issued 5 245 - - - - 250
Conversion of Convertible
Unsecured Loan Stock
("CULS")
100 3,870 - (127) - - 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
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'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
GBP'000s GBP'000s GBP'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
GBP'000s GBP'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
GBP3,340,000 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
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 rns@lseg.com or visit www.rns.com.
END
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