21 Jun 2021 07:00
LONDON STOCK EXCHANGE ANNOUNCEMENT
BMO Global Smaller Companies PLC
Audited Statement of Results
for the year ended 30 April 2021
Legal Entity Identifier: 2138008RRULYQP8VP386
Information disclosed in accordance with Disclosure Guidance and Transparency Rule 4.1
Financial highlights
Net Asset Value with debt at fair value ('NAV') total return of 47.9% versus 54.1% from the Benchmark return
The NAV rose to 174.90p from 119.70p.
Share price total return of 54.0%
The share price ended the year at 168.6p.
Total dividend of 1.75 pence
51st consecutive annual increase, up by 3.0%.
Shares ended the year at a discount to the NAV of 3.6%
Date: 21 June 2021
Contact: Peter Ewins
BMO Investment Business Limited
020 7628 8000
Chairman's Statement
This is my first report to you as Chairman covering a year that has been a challenge for all of us. I do hope that you and your families are well and looking forward to a greater sense of normality in your daily life. It has certainly been a momentous period in the financial markets too.
At the start of the year under review, global equity markets had begun to recover from their pandemic-driven collapse but the outlook was far from clear. However, massive fiscal and monetary policy stimulus measures drove share prices higher as the year progressed. The successful development of vaccines for COVID-19 led to a further material jump in stock markets in the second half of the year.
Our focus is on smaller companies; those at the lower end of market capitalisation ranges. Over the year, smaller stocks were the best performers in most markets and it is heartening to see that confidence in smaller companies returned so rapidly after such a severe economic shock. The Company's Benchmark was up by a remarkable 54.1% in total return terms. The Net Asset Value ('NAV') total return, taking the value of the Company's debt at fair value, lagged this figure but was still up by 47.9% and ended the year at 174.9p. The share price closed at 168.6p, a record high, delivering a total return of 54.0%, virtually in-line with the Benchmark.
A number of factors influenced the NAV performance over the year and the Lead Manager's Review on pages 12 to 22 of the Report and Accounts discusses the background in detail. Certain sectors more geared into the recovery led the markets higher and some of the more speculative and higher risk stocks, that the Manager's conservative investment process avoids, were among the best performers. While past performance should never be extrapolated into the future, shareholders who have invested in the Company over the long term have done well, as shown below and in the 25 year record on age 91 the Report and Accounts.
Performance: Total return over the long-term | |||||
| 1 year % | 3 years % | 5 years % | 10 years % | 25 years % |
NAV total return | 47.9 | 32.4 | 85.7 | 221.2 | 1,023.3 |
Benchmark total return | 54.1 | 36.4 | 92.0 | 193.8 | 932.8 |
Share price total return | 54.0 | 27.2 | 78.3 | 220.5 | 1,154.1 |
Source: BMO GAM
The discount
The Company's shares traded at a discount to the NAV throughout the year, starting at 7.3% but ending at a narrower 3.6% (with debt at fair value).
We undertook share buybacks on a regular basis where opportunities arose, with 28.5m repurchased shares placed into treasury for potential reissuance in the future, if the shares return to a premium to NAV. The Board believes that a consistent and proactive approach to share buybacks is the right policy and serves to protect the rating of the shares in the market. The aim continues to be a discount level below 5% in normal market conditions.
Costs
Ongoing Charges for the year were slightly up at 0.78%, compared to 0.75% in the prior year. We hold a number of collective funds for exposure to Japan, Asia and Emerging Markets. The costs of these funds are included in the Ongoing Charges calculation (and are already reflected in the NAV) and were higher, reflecting the recovery in market levels. Our normal overhead expenses were lower in the year.
Dividends
As was flagged in last year's Report and Accounts and at the interim stage in the Lead Managers Review, the Company's income from dividends has fallen sharply. Revenue return per share of 1.26p was down 27.2%, with many companies suspending or re-basing their dividend payments early in 2020. This made sense at a time of huge uncertainty at the start of the pandemic but, as time has passed and economic news improved, many companies have been in a position to recommence dividend payments and we have seen this come through in our portfolio.
With the outlook for income improving, and taking account of the strong revenue reserves in hand of some £15.2m at 30 April 2021, the Board has decided to extend the Company's record to 51 consecutive years of dividend growth. The proposed final dividend of 1.20p will be paid to shareholders on 16 August, making a total of 1.75p for the year, up by 3.0% compared to last year. While paying this level of dividend will necessitate use of a small proportion of the revenue reserve, the Company remains in a strong position looking forward in relation to dividend payments.
Market and regional portfolio performance
While the pandemic and its economic effects were the prime focus during the year, political developments were important too, most critically in the US. The ending of the Trump presidency was a far from smooth process but the initial stock market response to the Democrats assuming control of both legislative houses was positive on the basis that an already highly stimulatory fiscal approach was likely to be augmented.
US small cap equities delivered excellent returns in the year as the local economy bounced back quicker than Europe, the UK and Japan. A less stringent approach to lockdowns in some parts of the country plus the much larger extent of stimulus in the US were contributing factors towards the speedier rebound, as was an efficient rollout of vaccinations.
As regards the UK, a post Brexit trade deal with the EU was finally concluded last December, leading to a revival of interest in the domestic market and lifting sterling against other currencies. There have been a number of takeover approaches for UK listed companies from overseas in recent months, contributing to a better relative performance from the UK smaller company sector, again also helped by the success of the vaccination programme.
European economic performance was mixed, depending in part on the scale and effectiveness of the local fiscal support. The EU responded to the pandemic by loosening its own fiscal rules and eventually agreement was reached to set up a €750bn European recovery fund. While this was a positive move, the extent and pace of stimulus in Europe so far has been more modest in scale than that of the US or indeed the UK. Despite this, European small cap stocks enjoyed a strong year, with growth stocks doing particularly well.
Asian countries felt varying levels of impact from the pandemic, with North Asia, including China, generally managing to control the level of infection much better than others, such as India or Indonesia. China's economy recovered particularly well, while technology orientated stock markets like Korea and Taiwan also benefited as the pandemic lifted demand for IT equipment. Japanese small caps had a relatively disappointing year in comparison with other markets, though they had performed better in the previous year.
Geographical performance (total return sterling adjusted) | ||
for the year ended 30 April 2021 | ||
| Portfolio | Local smaller companies index |
UK | 48.1% | 55.9% |
Europe | 57.5% | 53.7% |
North America | 46.3% | 59.3% |
Japan | 24.5% | 17.5% |
Rest of World* | 36.1% | 57.2% (Pacific ex Japan) 44.7% (Latin America) |
Source: BMO GAM
*Performance of the Rest of World portfolio is shown here against both Asian and Latin American smaller company indices
The returns from the Company's regional portfolios and the local small cap indices are shown below. With so much going on in relation to the pandemic, it was a year when the Company's regional returns diverged significantly from their benchmarks. Relative performance in North America was impacted by not having enough exposure to some of the stronger recovery areas such as Industrials and some parts of the consumer sectors, while strength in higher risk areas such as biotechnology stocks also hurt. The UK portfolio was also not sufficiently exposed to some of the sectors that drove the rally, but it should be noted that this was the first year in 11 that it has underperformed. Performance of the Rest of World collectives portfolio was disappointing, with the funds held nearly all struggling to keep up with the Asian and Latin American small cap indices. As a reminder, we gain exposure to these markets by outsourcing the portfolios to other managers through collective vehicles. Our European portfolio performed well however, helped by strong returns from a number of purchases made early in 2020, and the fund holdings in Japan also outperformed by a good margin.
Asset allocation
The impact of asset allocation positioning in the year was not material towards overall relative performance. Allocation between markets changed a little with the Manager adding to the UK weighting late in the year on the basis that the conclusion of Brexit was likely to be helpful. The Japanese weighting fell largely as a consequence of the weaker performance of the market compared to other parts of the world but the Manager also took some money out of the collectives holdings here as the year progressed.
Geographical distribution of the investment portfolio as at 30 April 2021 | |
North America | 39.7% (40.1%) |
UK | 28.6% (25.6%) |
Europe | 13.2% (12.6%) |
Rest of World | 11.5% (11.6%) |
Japan | 7.0% (10.1%) |
The percentages in brackets are as at 30 April 2020
Source: BMO GAM
Geographical weightings against Benchmark as at 30 April 2021 | |
North America | -1.9% |
UK | -1.4% |
Europe | +3.4% |
Japan | +0.5% |
Rest of World | -0.6% |
Source: BMO GAM & MSCI
Gearing Policy
Having started the year with no gearing, the Manager changed stance as the economic outlook improved and gradually employed more gearing after the positive news on vaccines. At the end of the year effective gearing was 3.8%. Borrowings are made up of a combination of long-term private placement notes and drawings from the Company's revolving credit facility. The blended cost of debt at the end of the year of approximately 1.9% is very low by historic standards.
ESG
While the importance of incorporating Environmental, Social and Governance ('ESG') themes into investment is increasing, it is worth pointing out that our Manager has depth and longevity of expertise in relation to ESG matters. The fund managers incorporate ESG factors into their valuations of potential investments and the report on pages 23 to 26 of the Report and Accounts provides further details on this, including a number of case studies. Maintaining a focus on the sustainability of investee companies' business models and the ESG credentials of the portfolio overall is becoming increasingly important. This is monitored closely by the Board.
The Board
There have been no further changes to the Board since the retirement of my predecessor as Chairman, Anthony Townsend, and Jane Tozer the former Senior Independent Director, at last year's AGM. I would personally like to thank both of them for their long and valuable contribution to the governance of the Company. At this stage we plan to maintain the Board at its current size, but we will keep this and its evolution under review.
Online Shareholder Meeting and Annual General Meeting
The Company's AGM will be held at the offices of BMO Global Asset Management, Exchange House, Primrose Street, London EC2A 2NY, on Thursday, 12 August 2021 at 2.00 p.m. Under normal circumstances we enjoy meeting and talking to as many shareholders as possible in person at the AGM. However, we are mindful of the fact that the meeting is due to take place very soon after Government restrictions are due to be lifted and therefore shareholders may be reluctant to travel to the meeting. Therefore, to provide certainty over arrangements and to enable shareholders to engage with the Lead Manager and with the Board, we have decided to hold an interactive online shareholder meeting on Thursday, 29 July 2021 at 2.00 p.m. There will be a presentation by the Lead Manager, which will be followed by a question and answer session with him and the Board. This will allow shareholders time to cast their votes at the AGM on 12 August 2021 after having had the opportunity to see the Lead Manager's presentation and to ask questions of the Board. I encourage all shareholders to do so. Online access details for the presentation are included on the Form of Proxy or Form of Direction or can be obtained by sending an email to gscagm@bmogam.com. To help the online event run smoothly, we request that questions are sent in advance to this email address.
The formal business of the AGM will take place two weeks later, on 12 August 2021, with a minimum of two shareholders only present in person, sufficient to form a quorum to enable the meeting to proceed and business to be conducted. It is strongly recommended that shareholders do not attend and entry will be restricted and/or refused in accordance with the Company's Articles of Association. Nevertheless, shareholders can be represented by the chairman of the meeting acting as their proxy. We therefore urge shareholders to lodge your votes to arrive by the deadline stated in the notice of meeting, appointing the chairman of the meeting as your proxy. Voting on all resolutions will be held on a poll, the results of which will be announced via a regulatory announcement and will be shown on the Company's website following the meeting.
BMO/Columbia Threadneedle
Readers may be aware that the Bank of Montreal, the ultimate parent company of the Company's Manager, BMO Investment Business Limited, has announced an intention to sell its asset management business covering Europe, the Middle East and Africa to Ameriprise Financial Inc., the parent company of Columbia Threadneedle. Details have not yet been finalised and published but both companies have confirmed they expect little change for most clients. The Board welcomes that assurance of continuity and will, of course, ensure that shareholders are kept informed as further details become available.
Outlook
While the battle against COVID-19 is far from won, as can be seen around the world with still tragic consequences, the markets have largely discounted that we are indeed heading back to normal. Corporate earnings are rebounding strongly and the remainder of 2021 looks promising on this front.
Of course, there remains a risk of a resurgence of the pandemic if vaccines prove ineffective against new strains but the near-term market focus has moved on to equity valuations, which have risen dramatically over the last year. At the same time inflationary pressures are stirring across a wide range of commodities as demand patterns have started to normalise. This is causing concern that there may be a need for monetary policy to be tightened, especially in the US given all the current and projected fiscal stimulus. Rising bond market rates could be expected to feed through to a de-rating of the more highly rated growth stocks, something that we have already seen in evidence in recent months.
The Manager will continue to seek to focus investment on stocks with proven and sustainable business models, with strong management teams and balance sheets, where valuations do not look too stretched. This approach, together with diversification across countries and sectors, should continue to deliver good returns over the medium term.
Anja BalfourChairman18 June 2021
Principal Risks and Future Prospects
The Board's processes for monitoring the principal risks and identifying emerging risks are set out on page 54 and in note 25 to the Report and Accounts. Any emerging risks that are identified and that are considered to be of significance are included on the Company's risk schedule together with any mitigations. These principal and emerging risks are reviewed regularly by the Audit and Management Engagement Committee and by the Board. Most recently, consideration has been given to the ongoing impact from COVID-19 and this is referred to in the Chairman's Statement, the Lead Manager's Review and in the table below. The principal risks are largely unchanged from those reported in the prior year. Those identified as most relevant to the assessment of the Company's future prospects and viability were those relating to the potential impact from COVID-19, inappropriate business strategy, potential investment portfolio under-performance and its effect on the Company's share price discount/ premium and dividends, as well as threats to security over the Company's assets.
Principal Risk: Service providers and systems security - Errors, fraud or control failures at service providers or loss of data through business continuity failure or cyber attacks could damage reputation or investors' interests or result in loss. Cyber risks remain heightened.
Unchanged throughout the year.
Mitigation by strategy: The ancillary functions of administration, company secretarial, accounting and marketing services are all carried out by the Manager. Custody and depositary services are provided by third party suppliers.
The Board monitors effectiveness and efficiency of service providers' processes through internal efficiency KPIs.
Actions taken in the year: The Audit and Management Engagement Committee and the Board have regularly reviewed the Company's risk management framework with the assistance of the Manager. Regular control reports are provided by the Manager which cover risk, compliance and oversight of third-party service providers, including IT security and cyber-threats. Reports from the Depositary, which is liable for the loss of any of the Company's securities and cash held in custody unless resulting from an external event beyond its reasonable control, were reviewed. The Board is satisfied that the continuity arrangements of all key suppliers including the registrar, depositary, custodian and auditor have continued to work well during the restrictions imposed as a result of COVID-19. As such, this risk is unchanged.
Principal Risk: Investment performance - Inappropriate business strategy or policy, or ineffective implementation, could result in poor returns for shareholders. Failure to access the targeted market or meet investor needs or expectations, including ESG and climate change in particular, leading to significant pressure on the share price. Political risk factors could also impact performance as could market shocks such as those experienced in relation to COVID-19.
Unchanged throughout the year.
Mitigation by strategy: Under our Business Model, a manager is appointed with the capability and resource to manage the Company's assets, asset allocation, gearing, stock and sector selection and risk. The individual regional investment portfolios are managed to provide in combination a well-diversified, lower volatility and lower risk overall portfolio structure. The Board holds a separate strategy meeting each year and considers investment policy review reports from the Manager at each Board meeting. The performance of the Company relative to its Benchmark, its peers and inflation is a KPI measured by the Board on an ongoing basis and is reported on page 11 of the Report and Accounts.
Actions taken in the year: BMO GAM has been retained as Manager and continues to deliver on the Company's objective. It operates within a responsible investment culture under a corporate commitment to four key Sustainability Principles: Social Change, Financial Resilience, Community Building and Environmental Impact. Through the Manager, the Company has the flexibility to innovate, adapt and evolve as ESG necessities and expectations change. Marketing and investor relations campaigns continued throughout the year, including presentations by the Lead Manager to wealth managers across the country. Detailed reports provided by the Lead Manager have been reviewed by the Board at each of its meetings. As reported in the Key Performance Indicators on page 11 of the Report and Accounts, long-term performance remains in line with expectations and the dividend for the year, although not fully covered, has increased. This risk is considered unchanged.
Principal Risk: Discount/premium - A significant share price discount or premium to the Company's NAV per share, or related volatility, could lead to high levels of uncertainty or speculation and the potential to reduce investor confidence. Increased uncertainty in markets due to the effect of COVID-19 could lead to falls and volatility in the Company's NAV.
Unchanged throughout the year.
Mitigation by strategy: The Board has established share buyback and share issue policies, together with a dividend policy, which aim to moderate the level of share price discount or premium to the NAV per share and related volatility and it seeks shareholder approval each year for the necessary powers to implement those policies. The Company's discount/premium is a KPI measured by the Board on an ongoing basis and is reported on page 11 of the Report and Accounts.
Actions taken in the year: The Company's shares traded on a discount during the year and a total of 28,455,955 shares were bought back in line with the Company's buyback policy. Economic and market uncertainty remains, but this risk is considered unchanged.
Five Year Horizon
Through a series of connected stress tests ranging from moderate to extreme scenarios including the impact of market shocks and based on historical information, but forward looking over the five years commencing 1 May 2021, the Board assessed the risks of:
• The impact of COVID-19.
• Potential illiquidity of the Company's portfolio.
• Substantial falls in investment values on the ability to meet loan covenant requirements and to repay and re-negotiate funding.
• Significant falls in income on the ability to continue paying steadily-rising dividends and maintaining adequate revenue reserves.
The Board also took into consideration the operational robustness of its principal service providers and the effectiveness of business continuity plans in place, in particular given the impact of COVID-19, potential effects of anticipated regulatory changes and the potential threat from competition.
Based on its assessment and evaluation of the Company's future prospects, the Board has a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the coming five years. This period has been chosen because it is consistent with the advice provided by many investment advisers, that investors should invest in equities for a minimum of five years. The Company's business model, strategy and the embedded characteristics, listed in the Report and Accounts, have helped define and maintain the stability of the Company over many decades. The Board expects this to continue and will continue to assess viability over subsequent five year rolling periods.
Statement of Directors' Responsibilities in Respect of the Financial Statements
In accordance with Chapter 4.1.12 of the Disclosure Guidance and Transparency Rules the Directors confirm, in respect of the annual report for the year ended 30 April 2021 of which this statement of results is an extract, to the best of their knowledge that:
· the financial statements, prepared in accordance with applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit of the Company;
· the Strategic Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces; and
· in the opinion of the Directors the annual report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's position and performance, business model and strategy.
On behalf of the Board
Anja Balfour
Chairman
18 June 2021
Income Statement
for the year ended 30 April | 2021 | 2020 | ||||
| Revenue | Capital | Total | Revenue | Capital | Total |
| £'000s | £'000s | £'000s | £'000s | £'000s | £'000s |
|
|
|
|
|
|
|
(Losses)/gains on investments | - | 325,701 | 325,701 | - | (121,578) | (121,578) |
Foreign exchange gains/(losses) | (6) | (1,737) | (1,743) | 14 | (33) | (19) |
Income | 10,216 | 762 | 10,978 | 13,795 | 1,442 | 15,237 |
Management fee | (1,058) | (3,174) | (4,232) | (1,039) | (3,118) | (4,157) |
Other expenses | (872) | (27) | (899) | (1,136) | (23) | (1,159) |
Net return before finance costs and taxation | 8,280 | 321,525 | 329,805 | 11,634 | (123,310) | (111,676) |
Finance costs | (199) | (598) | (797) | (326) | (979) | (1,305) |
Net return on ordinary activities before Taxation |
8,081 |
320,927 |
329,008 |
11,308 |
(124,289) |
(112,981) |
Taxation on ordinary activities | (665) | - | (665) | (815) | - | (815) |
Net return attributable to equity shareholders |
7,416 |
320,927 |
328,343 |
10,493 |
(124,289) |
(113,796) |
|
|
|
|
|
|
|
Return per share (basic and diluted) - pence | 1.26 | 54.50 | 55.76 | 1.73 | (20.52) | (18.79) |
|
|
|
|
|
|
|
The total column of this statement is the profit and loss account of the Company.
All revenue and capital items in the above statement derive from continuing operations.
A statement of total comprehensive income is not required as all income and expenses of the Company have been reflected in the above statement.
Statement of Changes in Equity
for the year ended 30 April 2021 |
|
|
|
|
|
| |
|
|
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 2020 | 15,513 | 212,639 | 16,158 | - | 464,282 | 17,923 | 726,515 |
Movements during the year ended 30 April 2021 |
|
|
|
|
|
|
|
Dividends paid | - | - | - | - | - | (10,092) | (10,092) |
Shares repurchased by the Company and held in treasury |
- |
- |
- |
- |
(37,243) |
- |
(37,243) |
Costs relating to sub-division and broker |
- |
- |
- |
- |
(15) |
- |
(15) |
Net return attributable to equity shareholders |
- |
- |
- |
- |
320,927 |
7,416 |
328,343 |
Balance at 30 April 2021 | 15,513 | 212,639 | 16,158 | - | 747,951 | 15,247 | 1,007,508 |
for the year ended 30 April 2020 |
|
|
|
|
|
| |
|
| 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 year ended 30 April 2020 |
|
|
|
|
|
|
|
Dividends paid | - | - | - | - | - | (10,234) | (10,234) |
Shares repurchased by the Company and held in treasury |
- |
- |
- |
- |
(19,745) |
- |
(19,745) |
Conversion of Convertible Unsecured Loan Stock ('CULS') Costs relating to sub-division and broker |
394
- |
15,829
(46) |
-
- |
(506)
- |
-
- |
-
- |
15,717
(46) |
Net return attributable to equity shareholders |
- |
- |
- |
- |
(124,289) |
10,493 |
(113,796) |
Balance at 30 April 2020 | 15,513 | 212,639 | 16,158 | - | 464,282 | 17,923 | 726,515 |
Balance Sheet
at 30 April |
| 2021 |
| 2020 |
|
| £'000s |
| £'000s |
Fixed assets |
|
|
|
|
Investments |
| 1,045,255 |
| 722,577 |
Current assets |
|
|
|
|
Debtors |
| 7,021 |
| 1,379 |
Cash and cash equivalents |
| 6,870 |
| 41,043 |
Total current assets |
| 13,891 |
| 42,422 |
|
|
|
|
|
Creditors: amounts falling due within one year |
|
|
|
|
Bank loans |
| (8,521) |
| - |
Creditors |
| (8,117) |
| (3,484) |
Total current liabilities |
| (16,638) |
| (3,484) |
Net current (liabilities)/assets |
| (2,747) |
| 38,938 |
Total assets less current liabilities |
| 1,042,508 |
| 761,515 |
Creditors: amounts falling due after more than one year |
|
|
|
|
Loan notes |
| (35,000) |
| (35,000) |
Net assets |
| 1,007,508 |
| 726,515 |
Capital and reserves |
|
|
|
|
Share capital |
| 15,513 |
| 15,513 |
Share premium account |
| 212,639 |
| 212,639 |
Capital redemption reserve |
| 16,158 |
| 16,158 |
Capital reserves |
| 747,951 |
| 464,282 |
Revenue reserve |
| 15,247 |
| 17,923 |
Total shareholders' funds |
| 1,007,508 |
| 726,515 |
|
|
|
|
|
Net asset value per share (debt at par value) - pence |
| 175.02 |
| 120.26 |
|
|
|
|
|
Statement of Cash Flows
for the year ended 30 April |
|
| 2021 | 2020 |
|
|
| £'000s | £'000s |
Cash flows from operating activities before dividends received and interest paid |
|
|
(4,437) |
(5,804) |
Dividends received |
|
| 9,005 | 14,245 |
Interest paid |
|
| (793) | (1,292) |
Cash inflows from operating activities |
|
| 3,775 | 7,149 |
Investing activities |
|
|
|
|
Purchases of investments |
|
| (230,833) | (215,751) |
Sales of investments |
|
| 233,941 | 266,677 |
Transaction costs |
|
| (460) | (453) |
Other capital charges |
|
| (28) | (20) |
Cash inflows/(outflows) from investing activities |
|
| 2,620 | 50,453 |
Cash inflows before financing activities |
|
| 6,395 | 57,602 |
Financing activities |
|
|
|
|
Ordinary dividends paid |
|
| (10,092) | (10,234) |
Cash flows from share buybacks for treasury shares |
|
| (37,254) | (19,343) |
Costs relating to sub-division of shares and broker |
|
| - | (46) |
Drawdown of loan notes |
|
| - | 35,000 |
Drawdown/(repayment) of bank loans |
|
| 8,370 | (34,157) |
Cash outflows from financing activities |
|
| (38,976) | (28,780) |
Net movement in cash and cash equivalents |
|
| (32,581) | 28,822 |
Cash and cash equivalents at the beginning of the year |
|
| 41,043 | 12,135 |
Effect of movement in foreign exchange |
|
| (1,592) | 86 |
Cash and cash equivalents at the end of the year |
|
| 6,870 | 41,043 |
|
|
|
|
|
Represented by: |
|
|
|
|
Cash at bank |
|
| 568 | 3,091 |
Shore-term deposits |
|
| 6,302 | 37,952 |
Cash and cash equivalents at the end of the year |
|
| 6,870 | 41,043 |
Notes
1 Dividend
The Directors have proposed a final dividend in respect of the year ended 30 April 2021 of 1.20 pence per share, payable on 16 August 2021 to all shareholders on the register at close of business on 16 July 2021. The recommended final dividend is subject to approval by shareholders at the Annual General Meeting.
2 Financial Risk Management
The Company is an investment company, listed on the London Stock Exchange, and conducts its affairs so as to qualify in the United Kingdom (UK) as an investment trust under the provisions of Section 1158 of the Corporation Tax Act 2010. In so qualifying, the Company is exempted in the UK from corporation tax on capital gains on its portfolio of fixed asset investments.
The Company invests in smaller companies worldwide in order to secure a high total return. In pursuing the objective, the Company is exposed to financial risks which could result in a reduction of either or both of the value of the net assets and the profits available for distribution by way of dividend. These financial risks are principally related to the market (currency movements, interest rate changes and security price movements), liquidity and credit. The Board, together with the Manager, is responsible for the Company's risk management.
The full details of financial risks are contained in note 25 of the Report and Accounts.
3 Report and Accounts
This statement was approved by the Board on 18 June 2021. It is not the Company's statutory accounts. The statutory accounts for the financial year ended 30 April 2021 have been approved and audited and received an independent auditors' report which was unqualified and did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report. The statutory accounts for the financial year ended 30 April 2020 also received an independent auditors' report which was unqualified and did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report.
The Report and Accounts for the year ended 30 April 2021 will be posted to shareholders and made available on the website bmoglobalsmallers.com. Copies may also be obtained from the Company's registered office, Exchange House, Primrose Street, London EC2A 2NY.
BMO Investment Business Limited,
Company Secretary
18 June 2021
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.
ENDS
A copy of the Report and Accounts will be submitted to the National Storage Mechanism and will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
The Report and Accounts will also shortly be available on the Company's website at bmoglobalsmallers.com where up to date information on the Company, including daily NAV and share prices, factsheets and portfolio information can also be found.