The Global Smaller Companies Trust

Date:              15 December 2020

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 2020

SUMMARY OF UNAUDITED RESULTS FOR THE HALF-YEAR ENDED 31 OCTOBER 2020

·    Net Asset Value with debt at market value ("NAV") increased to 133.93p per share, giving a total return of 13.1% compared to the Benchmark total return of 15.2%

·    The share price ended the period at 123.8p, delivering a total return of 12.6%

·    Interim dividend held at 0.55p per ordinary share

Manager's Review

Dear Shareholder,

I hope you and your family are well and are coping safely through this testing period.

After the turmoil induced by the coronavirus pandemic towards the end of the last financial year, the start of the new one saw global equity markets stage a solid rebound. Investors were essentially taking the view that the economic downturn, sharp though it was, was likely to prove short-lived, and that more normal conditions would re-emerge in due course. Global markets were of course also significantly under-pinned by a massive amount of fiscal and monetary support, especially across the leading developed economies, which have at least in part cushioned labour markets from the impact of the virus.

For the last couple of years, smaller company shares have tended to lag the larger company indices in the leading global markets, but over the six months, with an increased appetite to gain exposure to recovery stories becoming apparent, almost across the board it was the smaller company stocks that did better. The Company's Benchmark (30% Numis UK Smaller Companies excluding investment companies Index/70% MSCI All Country World ex UK Small Cap Index) ended the period up by a strong 15.2%, with international markets doing better than the UK, where the economic hit from COVID-19 proved more significant. Our portfolio was unable to match the strength of the Benchmark this time with the Net Asset Value (NAV) taking the Company's long-term liabilities at market value, returning 13.1%. Both of these numbers are expressed in sterling total return terms and while we have lagged, it's encouraging that most of last year's reverse in the NAV has been recouped in the first half of the new financial year.

The Company's shares rose by 11.5%, or by 12.6% taking account of the dividend paid in the period. They therefore ended on a 7.5% discount to the NAV, slightly higher than the 7.1% level at the end of April 2020. During the period, the Board made extensive use of its buyback powers, and acquired a total of 17.0m shares into treasury. These purchases have been accretive for the NAV and have also served to protect the discount. The aim remains to get the discount back below 5% in due course and buybacks have continued into the second half.

Dividends

The Company paid its 50th consecutive increase in annual dividend in August as planned. In the Annual Report the Chairman's Statement highlighted that the new year would be challenging on the income side given the already apparent impact of the pandemic on dividend payments from the investment portfolio, but that the revenue reserves in hand of £17.9m placed the Company in a strong position as regards dividends for the future. Since this time, we have seen more of our holdings move to restrict or suspend payments, and first half revenue return per share of 0.45p bore the scars of this, down by 55.9% on last year's level. Nevertheless the Board has decided to maintain the interim dividend payment at 0.55p, which will be paid on 29 January 2021 to shareholders on the register on 8 January 2021. Given the strong revenue reserve position there may be scope to continue dividend progression at the end of the year. This will be reviewed by the Board in June 2021 taking account of the income performance in the remainder of the year where we hope to see some companies resume distributions.

Market background

As mentioned above, this was a strong period for the markets, but it was not a time for all stocks to bounce. Companies have been impacted in very different ways by the pandemic, with some suppliers in the Technology sectors for example being boosted by higher demand from the rapid switch to working from home. Other winners from the lockdowns which have been necessary around much of the world, have included the supermarkets and their suppliers taking share from foodservice and the restaurant trade, while areas such as video gaming and online gambling have been boosted by additional time being available to be spent on such activities. People have tended to spend more money on home improvements and in their gardens. Shares in companies in these and a number of other more resilient areas such as Health care, did well in the six months.

The period proved on the other hand challenging for companies involved in areas such as travel, leisure and hospitality hard hit by the lockdowns and reduced corporate spending in these areas. Retailers lacking a strong online offering have also been crimped by the lockdowns as consumers have gravitated more towards online transactions. Investors turned cautious towards Real estate companies with exposure to office property at a time when a large number of employees continued to work from home. Within Industrials, companies exposed to the aerospace sector were under pressure, as orders from airlines collapsed and production build-rates were slashed. More positively, we did see encouraging signs from Purchasing Manager's Indices later in the period, with economic output and industrial production recovering after the sharp contraction around the time of the initial lockdowns in the spring.

As the period progressed, attention, aside from the ever-present debate around the outlook for the pandemic, second waves and the potential upside from a vaccine, shifted more towards the impending US election. With different policy agendas from the Republicans and Democrats, the result was likely to be important for a number of sectors. The end-result, of a Democratic President probably ultimately lacking control of the Senate  and hence the ability to enact market negative policies such as higher corporate taxes, has been warmly received by investors thus far, with the expectation being that fiscal policy will continue to support the economy in its recovery in the coming months.

Closer to home the long running UK/EU trade negotiations progressed every bit as slowly as expected with both sides seeking to wring concessions out of each other. Despite the potential risks surrounding these discussions, sterling ended the period a little stronger against the US dollar. The dollar was undermined by the Federal Reserve's more dovish approach to monetary policy, with the Bank pledging to keep rates close to zero even were there to be a period of higher inflation. We also have seen European, UK and Japanese central banks move to provide additional support in the form of more quantitative easing, with a move to negative interest rates in the UK under a new Governor of the Bank of England not seemingly totally out of the question.

Asian stock markets were supported by a more robust economic recovery in China. The greater success of the Chinese government in controlling the virus compared to most of the developed world, has allowed the country to return far quicker to something approaching normality. Travel within the country has more or less recovered to pre-crisis levels, with consumer spending picking up strongly too. While some other parts of Asia including India and Indonesia have struggled to control the pandemic and suffered more economic damage as a consequence, the region as a whole has performed well, with the news from the US election subsequent to the end of the period likely to be supportive too if trade policy become less fractious. Japan's change of Prime Minister midway through the period did not lead to panic, and the market performed steadily, again helped by the wider regional pick up together with less impact from the virus locally too.

Regional portfolio performance

We always report the performance of our regional or country portfolios against the relevant local smaller company indices and a table depicting this is again shown below. The market return figures confirm that all parts of the world delivered meaningfully positive returns, with Asian markets doing the best, helped by the Chinese economic recovery. Our portfolios failed to keep up with the market rallies in North America and the UK and our collectives portfolio for the Rest of World also lagged the Asian market surge. Being behind in North America and the UK is unhelpful given these are the largest segments of the portfolio but there was a partial offset from the outperformance in Europe and Japan. We benefited from a high exposure to resilient growth stocks on the Continent and outperformance by two of our three collective holdings in Japan helped to produce the good relative return here.

North America

We had a good last year in this part of the trust. However performance in the latest six months failed to keep up with a strong Russell 2000 Index which was lifted by signs that the US economy was holding up better than expected.

Taking the weaker parts of the portfolio first, World Fuel Services, as a distributor of aviation fuel, was right in the teeth of the slump in air travel and the shares fell by 15.8%. We added to our holding as we see the company as a market share gainer once the crisis is over. Fuel card operator WEX was similarly impacted by a much lower level of transportation activity and the low oil price. Within Industrials, Haynes International, as a supplier to the aerospace sector saw a sharp fall in demand feed through to compressed profits, while depressed demand in the steel market negatively impacted the results of electrode supplier Graftech International.

While Health care was a strong sector on the whole, our new holding in medical equipment supplier Hill Rom suffered as less patient visits impacted upon buying patterns, while Encompass Health was impacted by a reduction in home visits. Shares in education stock Grand Canyon suffered as the prospect of a Democratic administration hurt sentiment towards the stock and the campus was closed by COVID-19. Monro, the tyre and automotive repair business also fell as miles driven dropped and the company's CEO departed unexpectedly. Consultancy business WSP Group which did well last year fell back in the period, with the company's shares impacted by a large equity raise.

Perhaps unsurprisingly, several of our Technology stocks were among the best performers for us in the period. Cerence and Nuance Communications both involved in the use of artificial intelligence solutions, but for different end markets, saw their share prices surge as new business was won and brokers became more optimistic on their prospects. A new holding earlier in 2020 in NETGEAR proved timely with the company well positioned in the home wi-fi market at a time of stronger demand as a result of the pandemic. Dolby Laboratories was another good performer as demand for consumer electronics remained resilient, with SONOS also helped by more consumers looking to upgrade their home entertainment systems.

Our holdings in Martin Marietta Materials and Eagle Materials did well as investors looked forward to further Federal and state spending on infrastructure projects and the housing market recovered strongly, confounding earlier fears of a slump. Within Health care, The Ensign Group did well as its nursing facilities continued to benefit from solid occupancy, while Catalent's shares were up as the company announced significant COVID drug and vaccine related wins alongside ongoing strong demand for its Biologics division. Although Financial stocks were generally underperformers, our holding in Jefferies Financial rose as the company reported market share gains and market volatility benefited its trading book. One final slightly surprising better performer was ski resorts operator Vail Resorts; while this year is proving to be tough as a result of a reluctance/inability to travel, the company appears to be winning some share back from a rival and sales of season passes surprised to the upside.

This has been a tougher period for the North American portfolio and we continue to work on re-balancing it, recognising that some of the recent stronger parts of the market are potentially not going to continue to lead again in 2021. We have added to a number of the stocks which have lagged and are actively looking for further fresh ideas in sectors offering recovery scope as the economy continues its revival.

UK

We also underperformed in the UK market over this period. Part of the problem was not holding some of the stronger stocks in the index, and in retrospect we missed some opportunities particularly in the consumer sectors. The UK market performed less well than most of the other main markets, in part due to the fact that the local economy has felt more of an impact from the pandemic. The composition of the UK smaller companies sector has also worked against it given a higher exposure to some of the worst impacted service sectors and Financials for example.

In terms of the stock specifics, our travel and leisure holdings including Go Ahead Group, On the Beach Group, Gym Group and Hollywood Bowl took another hit as activity levels remained well below previous levels even before the imposition of the second lockdown. Air leasing business Avation was also weak as its airline customer base battled to get through the downturn, while shares in marine and energy services business James Fisher headed lower as the outlook for profits deteriorated. The company has recently warned on profits, in part due to an inability for staff and other contractors to be able to travel to project sites. We continue to like the company's broad skill set for the medium term and have added to our holding.

In construction, shares in Breedon reversed as the well-regarded Chief Executive announced his retirement with trading activity in the early part of the period held back by the virus. Countryside Properties' profits suffered as land sales came in lower than expected and the business mix worsened, while property development company U&I Group failed to generate the expected trading and development gains as decision making from councils nearly ground to a halt. Other losers in the period included Pebble Group (lower demand for promotional products as the events market was curtailed), Energean Oil and Gas (fears of a delay to a key Israeli gas project), Orchard Funding Group (reduced demand for its niche loans) and Clinigen, which was impacted by a delay to the approval of a new drug using one of its own products as part of the treatment.

We did however have some notable winners. Even within the hard pressed hospitality sector, all-day café/bar operator Loungers Group, was able to demonstrate that its trade could recover rapidly upon re-opening and the shares rose by 56.6% over the six months. A number of our Technology stocks took advantage of higher demand, including Computacenter, Alfa Financial Software and XP Power. We also benefited from the merger of translation services provider SDL Group with RWS Group.

There were some good performers within Financials too, with alternatives asset management business Gresham House continuing to take more money into its attractive range of competencies and also winning a new investment trust mandate. Technology venture capital company Draper Esprit's shares did well as the company announced the sale of one of its largest investments, a gaming business, at an attractive price, and the management moved to raise more capital for deployment into Fintech investments and the broader technology opportunity set. OneSavings Bank produced strong results underlining the quality of its underwriting in the buy to let lending market place. Shares in XPS Pensions Group also rose nicely as the company delivered a solid set of results, underlining the steady nature of its pensions administration and actuarial services.

Elsewhere in the portfolio, other gainers included video games company Team17 Group and specialist logistics supplier Clipper Logistics which continues to win new retail customers in need of help to fulfil rising online business levels. Shares in Watches of Switzerland did well despite an impact on London tourist driven trade. Management retain strong relationships with the key watch suppliers and have done more business online. Finally, Tyman Group's shares did well as the company benefited from stronger demand in the North American housing market, and operational improvements fed through from the new management team.

We see scope for the UK market to make up some ground on the other markets though this may depend upon a satisfactory trade deal being concluded with the EU in the coming days. If this comes to fruition, then we see good recovery potential across a number of the names on the portfolio. As with the rest of the fund, we remain alert to the need to adjust the sector positioning in the months ahead.

Europe

Our portfolio in Europe outperformed the local European smaller companies market, with the more growth orientated stocks leading the way.

As elsewhere in the trust, several stocks have definitively been benefiting from the pandemic. HelloFresh, the home meal kits supplier falls into this camp, with the business seeing elevated levels of new customers feeding through to record profitability. Diagnostic testing supplies business Tecan Group has also benefited, and there has been more interest in its shares driving a rerating. Higher stock market volatility has helped platforms business Avanza, with customers trading more and the company has continued to increase its market share. Dometic, a supplier into the recreational vehicle market, also gained from the trend for more "staycation" holidays. The shares were also supported by signs that industry stocking was at a low ebb which is encouraging for future demand.

Some of the more cyclical names on the portfolio were also strong in the period. Industrial conglomerate Indutrade's results surprised to the upside, while swimming pool supplies company Fluidra also delivered strong results with demand holding up much better than expected in the key summer period. Nordic Semiconductor shares rose by 66.2% as the company beat expectations significantly on the back of accelerating demand for connected devices.

There were a few other good performers, notably Remy Cointreau, Rational and MIPS. Remy's shares had been weak early in the pandemic, providing us with an opportunity to acquire a holding at an attractive price. Better than expected sales subsequently in the Cognac market into the US and China have led to a sharp rally in the shares. Rational, the combi-steamer ovens supplier has been impacted by the lockdowns in the hospitality sector, but by less than earlier expected, and the shares rallied as this became apparent. MIPS, the helmet technology business announced strong results and flagged low levels of inventory in the core bicycle market. We see good prospects for it in other safety markets such as construction over time.

There were few conspicuous underperformers in the European portfolio this time, but we were disappointed by IT services company CanCom's results. Management have kept the cost base high at a time when the business mix in terms of margin has deteriorated, and performance against peers has been weak. We decided to sell our holding in ferry operator Irish Continental Group; the company is suffering from the travel quarantine rules and from Brexit driven uncertainties as a whole. We also decided to sell our holding in viscose supplier Lenzing, where the debt level is uncomfortable at a time of relatively high capex and depressed profitability.

Within the Financials area, our low exposure to Real Estate has been a blessing at a time of weakness here, though our holding in CA Immobilien Anlagen has been weak given structural medium-term concerns surrounding office demand. This is despite the German market to which it is mainly exposed looking more resilient than others such as the UK. Cerved in Italy has also been weak as a result of uncertainty around corporate strategy. We expect them to announce a decision soon on their credit management business which could lead to a better share price in time. One other weak holding was V-Zug, which was demerged in the period from Metall Zug; we decided to sell as consumer spending patterns in relation to their business remained un-inspiring.

European economies are under varying degrees of pressure from the pandemic but should be well-placed in the event of a successful vaccine to recover. Southern Europe in particular could do with a better tourist season in 2021. A more flexible approach on the fiscal side from the EU is to be welcomed. We have taken some profits in recent weeks from the best performing part of the portfolio and have added to some of the laggards. We remain optimistic based on the quality of the underlying portfolio for the medium term.

Japan

As stated above, this was a good period for the portfolio which delivered solid outperformance. We own three funds, managed by Aberdeen, Baillie Gifford and Eastspring. The first two were well positioned for the market in the period, with good exposures to Technology and Health care especially in relation to Baillie Gifford. A recent call with Abedeen's team indicates that they are looking to rebalance more recently towards some of the more cyclical areas such as automotive parts companies, which probably makes sense as industrial activity recovers.

Eastspring's fund performance was impacted by less exposure to the Technology sector. They have also had too little exposure to the more defensive sectors as a whole. We need to see evidence that their stock selection is paying off in the second half in an environment that may be more supportive for them if there is a rotation towards value stocks.

Japan's economy appears to be performing satisfactorily as whole, geared into the broader region and China where prospects appear to be encouraging. Politically the country remains settled despite the retirement of Prime Minister Abe on health grounds. We have however taken some money out of the market following the strong outperformance in the previous financial year compared to other markets. Valuations for quality stocks in Japan do not look especially attractive though there remains significant opportunity to unlock hidden value in some less well-loved parts of the market.

Rest of World

This was a period where the strength of China's recovery fed through to the wider Asian region. North Asian markets more closely tied into China and more exposed to Technology demand such as Korea and Taiwan, were also strong, Southern Asia and markets in particular like India, Indonesia and the Philippines, where COVID-19 was less well marshalled, were weaker performers. Latin American markets produced mixed returns too, with high cases of the virus in Brazil and some other countries like Peru causing major problems. Compared to the leading Western economies there was less in the way of government support to prop up economies so there has been more economic hardship evident in some of these countries.

Sector leadership in these markets as a whole mirrored the other parts of the world, with companies focused on technology doing well. Our portfolio returned a respectable 13.9% in the six months but this was underwhelming compared to the 23.2% from the MSCI AC Asia ex Japan Small Cap index even if it was better than Latin American small caps 12.5%. Our best performing fund in the period was the Australian New Horizons Fund helped by its skew towards Technology and Health care stocks. The HSBC managed Asian small cap fund also did well helped by a good exposure to the North Asian markets and supportive sector allocation. We suffered however from weak performance from our two investment trust holdings. The Scottish Oriental Smaller Companies Trust was undermined by its significant overweight to India, Indonesia and the Philippines, and the trust's discount remained wide. Utilico Emerging Markets trust was also weak in the period, with some of its investments in areas like airports being hit. The weakness of some emerging market currencies such as the Brazilian Real also hurt the NAV.

The US election results seems likely to lead to a slightly less confrontational trade policy environment between China and the US, and on this basis, and given the fact that the Asian region is on the whole performing better than elsewhere, there may be some grounds for additional exposure in the coming period.

Asset allocation

With all markets up by not dissimilar amounts, asset allocation positioning made only a modest positive contribution to the relative performance of the trust in the period, with the underweight to the UK, which lagged, the main reason for this.

In terms of changes to the geographic skew of the trust, we deployed some additional cash into the UK later in the period, as we felt that there was scope for a more significant recovery in the market than elsewhere in the event of either a vaccine being announced, or a positive resolution to the Brexit talks. The latter has been a heavy overhang on global investor sentiment towards the UK for a long time. We took some cash out of Europe following the strong performance of the portfolio here and also moderated the overweight in Japan as mentioned above. We continue to review exposures in the light of the US election result and the more recent gyrations in the markets.

Gearing

Gearing ended the period at 1.6%. Shareholders will recall that we had removed leverage early in the COVID-19 crisis. Recent better economic data and hopes for a vaccine combined with the likely maintenance of negligible interest rates, have made us more constructive on gearing now, though after the recent run up in markets, we are unlikely to make full use of our committed facilities at this stage.

Outlook

News of highly encouraging results from the trials of several potential COVID-19 vaccines in November have led to a dramatic further rally in global equities. Most of the best performing stocks since this news have been those which did badly as the pandemic struck, while companies which had been more resilient in the first half of the financial year have mainly lagged. This has been a rational response by the markets to the potentially transformed outlook for 2021. However, the speed with which vaccines can be rolled out safely to the general population will be key to determining if the recent changes in sector trends are to be maintained and the extent to which corporate earnings can be re-built.

As mentioned above, the conclusion of the Brexit discussions will be important for the UK equity market especially at the smaller company end of the spectrum. This will also have wider ramifications especially for European stocks and sterling in the foreign exchange markets.

We have made some adjustments to the portfolio to increase exposure to companies we see as offering greater exposure to recovery in a post-pandemic world, while trimming some of those where valuations look more stretched after the market run-up. The scale of economic and market dislocation this year means that there are still opportunities even after the recovery so far, although at the macro-level many countries will take some time to get back to pre-COVID levels of activity. We need to be conscious of the lasting damage done to certain sectors and companies in these areas. Frighteningly large fiscal deficits are not today's central problem, but will need to be addressed in time. From our perspective, regular communication with our holdings and with potential new opportunities will continue to be priorities in the months ahead.

Peter Ewins

Lead Manager

14 December 2020

Unaudited Condensed Income Statement

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

Unaudited Condensed Balance Sheet

Unaudited Condensed Statement of Cash Flows

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 2020.

2    Dividend

The Directors have declared an interim dividend in respect of the year ending 30 April 2021 of 0.55p per share, payable on 29 January 2021 to all shareholders on the register at close of business on 8 January 2021. The amount of this dividend will be £3,218,000 based on 585,100,345 shares in issue at 10 December 2020. This amount has not been accrued in the results for the half-year ended 31 October 2020.

3    Going concern

In assessing the going concern basis of accounting the Directors have had regard to the guidance issued by the Financial Reporting Council. They have also considered the Company's objective, strategy and policy, the current cash position of the Company, the availability of the loan facility and compliance with its covenants and the operational resilience of the Company and its service providers.

The global economy continues to suffer considerable disruption due to the effects of the COVID-19 pandemic and the Directors have given serious consideration to the consequences for this Company. The Company has private placement and banking covenants and at present the Company's financial position does not suggest that any of these are close to being breached.

The Company experienced a very substantial decrease in its Net Asset Value during a short period of volatility as a result of the market shock that occurred in March. The Directors have considered the remedial measures that are open to the Company in the event of a recurrence to the extent that a covenant breach could occur. As at 10 December 2020, the last practicable date before publication of this report, borrowings amounted to £35 million. This is in comparison to a Net Asset Value of £895 million. In accordance with its investment policy the Company is mainly invested in readily realisable, globally listed securities.

The Company operates within a robust regulatory environment. The Company retains title to all assets held by the Custodian. Cash is held with banks approved and regularly reviewed by BMO GAM and the Board. The Directors have noted that home working arrangements have been implemented at BMO GAM and many of the Company's key suppliers without any noticeable impact upon service delivery and operations.

Based on this information the Directors believe that the Company has the ability to meet its financial obligations as they fall due for a period of at least twelve months from the date of approval of these financial statements. Accordingly, these financial statements have been prepared on a going concern basis.

4    Results

The results for the half-year ended 31 October 2020 and 31 October 2019, 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 2020; 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 2020 are an extract from those accounts.

The report and accounts for the half-year ended 31 October 2020 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

14 December 2020

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 2020. They include:

·      Errors, fraud or control failures at service providers or loss of data through business continuity failure or cyber-attacks could damage reputation or investors' interests or result in loss. Cyber risks remain heightened.

·      Inappropriate business strategy or policy, or ineffective implementation, could result in poor returns for shareholders. Failure to access the targeted market or meet investor needs or expectations, including ESG and climate change in particular, leading to significant pressure on the share price. Political risk factors could also impact performance as could near term market shocks such as those experienced in relation to coronavirus (COVID-19).

·      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 further falls in volatility and the Company's NAV.

The global economy has suffered considerable disruption due to the effects of the COVID-19 pandemic. The Directors have reviewed the key risk register for the Company which identifies the risks that the Company is exposed to, the controls in place and the actions being taken to mitigate them.

The Board considers that despite remarkable progress towards the introduction of vaccines in coming months to protect against COVID-19, the threat from the principal risks remain significant and have considered this in relation to going concern, see note 3.

 It is noted that:

·      Home working arrangements have been implemented at BMO GAM and many of the Company's key suppliers and this has been without incident or any noticeable impact upon service delivery and operations;

·      Performance has been robust during a period of extreme volatility and a strong recovery in markets and in the share price indicating that the strategy of the Company remains in investor demand and continues to meet expectations.

·      While the Company's shares are still trading at a discount, this has narrowed significantly since the time of the initial market shock and with much less volatility.

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

Anja Balfour

Chairman

14 December 2020