F&C Asset Management : Strong performance from the UK small cap market drives returns for F&C Global Smaller Companies

F&C Global Smaller Companies PLC ('the Company') has benefited from a strong performance from its UK portfolio, it announced in its annual results today, for the year to 30 April 2014. During the year the UK small cap portfolio returned 26.6%, beating the local small cap market return of 23%. There were also good returns made across the Company's European and US portfolios of 21.4% and 11.5% respectively in sterling total return terms. While the Japanese portfolio posted a -4.4% return, this was the third year in a row that this part of the portfolio beat the local Japanese small cap market. The Rest of World portfolio lost 8.7% over the year as emerging markets underperformed.
The Company's net asset value (NAV), with the Company's debenture taken at nominal value, delivered a total return over the year of 12.3%, or 12.6% including the debenture at fair market value, and the share price rose by 9.9% to 840p. After strong outperformance over the prior 3 years, the Company's returns for the year were broadly in line with its benchmark, a blended index of the returns from the MSCI All Country World ex UK Small Cap Index (70%) and Numis UK Smaller Companies (excluding investment companies) Index (30%), which produced a total return of 12.4% over the period. The Company is the top performing trust within the Association of Investment Company's (AIC) Global sector over 10 years to the end of April
2014, and over this period the share price has more than quadrupled in total return terms.
With the Company's investment portfolio generating a rising stream of income, and costs falling, the Board has proposed a payment of a higher final dividend of 5.50p, which will be payable on 15 August 2014 to shareholders on the register at 18 July 2014. This takes the dividend for the full year to 8p, up 23.1%. The Board intends to continue to maintain a progressive dividend in the future.
Throughout the year the Company was overweight to Europe, which benefited performance. The Company was underweight emerging markets which also helped and the manager is now starting to add exposure to these markets. The portfolio remains underweight in the US as valuations here seem less attractive, while the overweight stance towards Japan is being retained into the new year with corporate earnings trends in this market still encouraging.
Commenting on the outlook for global smaller companies, Peter Ewins, fund manager of the Company, said:
"Developed market equities outside of Japan have re-rated in the last few years, and smaller companies have been at the forefront of this. We therefore need to redouble our analysis to ensure that we invest in companies which are likely to deliver to plan in the coming period. We still believe that we can build a portfolio that can deliver good returns over the medium term."
The share price ended the year at a 0.1% discount to the NAV.

At the end of April 2014, the Company had no effective gearing, with net cash in hand more than covering the Company's £10m debenture liability, which is due for repayment at the end of 2014. Given the strong historic performance delivered by the Manager's investment approach, the Board has concluded that structural gearing through the investment cycle is appropriate to enhance shareholder returns in the future. As a result, the Board is considering a placing, open offer and offer for subscription of new convertible unsecured loan stock to raise up to £40m. This issue would be subject to shareholder approval and a further announcement in relation to this will be made in due course.

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 NAV total return of 12.3%

 Share price rose by 9.9%

 Performance led by UK portfolio, outperformed here, in the US and Japanese portfolios

 Final dividend payment increase to 5.50p, taking the dividend for the full year to 8p, up 23.1%

 Company is the top performing trust within the AIC's Global sector over 10 years

 Ongoing charges, excluding performance fees, reduced to 0.76% (from 0.85% in 2012/13)

 F&C Global Smaller Companies is the largest investment trust to offer investor access to a broadly spread global smaller companies portfolio.

 The portfolio consists of individual smaller company investments within the US, UK and European markets, and fund holdings targeting smaller companies in Japan, Asia, Latin America and other smaller territories.

- ends - The full results statement is attached.

Richard.janes@fandc.com

F&C is focused exclusively on managing money for its clients. It manages assets for a combination of insurance clients, institutional investors, intermediaries and private individuals. F&C invests across all major asset classes - equities, fixed income and property - and has specialist expertise in asset allocation, alternative investments, liability driven investments, multi-manager, private equity funds and Environmental Social and Governance (ESG) Investing. The F&C Group includes F&C REIT, a global real estate asset manager.
F&C has a strong footprint in the U.K. and the rest of Europe with assets under management of approximately £83 billion as at 31 March 2014. F&C has a rich heritage that dates back almost 150 years and can be traced back to the founding in 1868 of the Foreign & Colonial Investment Trust.
F&C is part of Bank of Montreal (BMO) Global Asset Management, a global investment manager with more than US$131 billion in assets under management. BMO Global Asset Management is a wholly owned subsidiary of BMO Financial Group (NYSE: BMO), a fully diversified financial services organisation with more than US$532 billion in assets and more than 45,000 employees as of 31 January 2014.
Past performance should not be seen as an indication of future performance. The value of investments and income derived from them can go down as well as up as a result of market or currency movements and investors may not get back the original amount invested. The information, opinions estimates or forecasts contained in this document were obtained from sources reasonably believed to be reliable and are subject to change at any time. F&C Group Companies may from time to time deal in investments mentioned herein on behalf of their clients. The source of information in all graphs is F&C unless otherwise stated. F&C Management Limited is authorised and regulated by the Financial Conduct Authority FRN: 119230 F&C Management Limited is a member of the F&C Group. The F&C Group is wholly owned by BMO Global

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Asset Management (Europe) Limited, which is itself a wholly owned subsidiary of the Bank of Montreal. F&C, the F&C logo, REO and the 'reo' logo are registered trade marks of F&C Asset Management plc. F&C INVESTMENTS and the F&C INVESTMENTS logo are trade marks of F&C Management Limited. © Copyright F&C Management Limited 2014. All Rights Reserved. Neither this document nor any part of it may be reproduced by any party whether by photocopying or storing in any medium by electronic means or otherwise without the prior approval of F&C Management Limited.
F&C Management Ltd accepts no liability in respect of the information or any views expressed herein which may be subject to change without notice at any time.

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