Brown Advisory US Smaller Companies PLC Annual Report and Financial Statements for the year ended 30 June 2024

Brown Advisory US Smaller Companies PLC

Annual Report and Financial Statements

for the year ended 30 June 2024

Brown Advisory US Smaller Companies PLC

6th Floor

125 London Wall

London EC2Y 5AS

Job No: 52458 Proof Event: 19 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

Job No: 52458 Proof Event: 19 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

Job No: 52458 Proof Event: 19 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

Job No: 52458 Proof Event: 19 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

Governance Company Information

Job No: 52458 Proof Event: 31 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

for the year ended 30 June 2024 1

Financial StatementsStrategic Report

Contents

Strategic Report

Introduction to Brown

Advisory US Smaller

Companies PLC

Investment Objective,

Investment Policy and

Benchmark Index

Financial Highlights 6

Financial Statements

Statement of Comprehensive Income 76

Statement of Financial Position 77

Statement of Changes in Equity 78

Statement of Cash Flows 79

Notes to the Financial Statements 81

Company Information

Glossary of Terms

(including Alternative

Performance Measures)

Notice of Annual General

Meeting

Notes for the Annual

General Meeting

Governance Report

Directors 42

Report of the Directors 44

Corporate Governance 52

Report of the Audit and Risk Committee 56

Directors’ Remuneration Report and Policy 59

Statement of Directors’ Responsibilities 63

Independent Auditor’s Report 64

Chairman’s Statement 7

Portfolio Manager’s

Review

Twenty Largest Holdings 18

List of Investments 23

Strategic Report 32

Investor Information 101

Important Risk Warnings 103

Company Information 104

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Brown Advisory US Smaller Companies plc

2 Annual Report and Financial Statements 2024

US Small-Caps: Opportunity and

Selection

Brown Advisory sees the US small and

mid-sized company sector as diverse

and dynamic, offering long-term capital

growth opportunities. With many

companies to choose from, selection is

crucial.

Against this backdrop, the Company

has endorsed Christopher and George’s

investment style, focusing on high-

quality, well-managed small-cap

businesses with the potential to grow into

mid and large-caps over time. The team

also pays close attention to the price

they pay, selecting shares at attractive

valuations to maximize capital growth

potential.

What Does Brown Advisory US

Smaller Companies PLC (the

“Company”) Do?

The Company aims to achieve long-term

capital growth by investing in a diversified

portfolio of quoted US smaller and

medium-sized companies.

The portfolio management team, Brown

Advisory’s Christopher Berrier and

George Sakellaris, CFA, takes a rigorous

and disciplined approach to investing,

emphasising long-term, risk-adjusted

returns.

Why Invest?

The Company offers a cost-effective way

to access the large, entrepreneurial group

of small-cap companies in the US, the

world’s largest economy.

Small-cap companies span a wide range

of sectors and industries, unlike the

relatively narrow large-cap market that

is dominated by a few giants. Investing

in these smaller companies offers early

access to the successful businesses that

have the potential to become large-cap

companies in the future.

US small-cap companies are often – and

Brown Advisory believes mistakenly –

underrepresented in many investors’

portfolios but can provide diversification

and deliver positive returns over the long

term.

Introduction to Brown Advisory US Smaller

Companies PLC

GROWTH

Opportunity

– Durability

– Large and/or growing

market

– Market leader or share

gainer

– Differentiated business

model

GOVERNANCE

Execution

– Trust & transparency

– Capable, shareholder-

friendly

– Diverse and appropriate

Board structure

– Well-structured, aligned

incentives

GO-TO MARKET

Economic profit

– Higher Return on

Investment Capital

(ROIC)

– Highly valuable

incremental revenue

– High and/or rising

margins and returns

– Capital efficient

50%

100%

150%

200%

250%

On a Rolling 10-Year Basis, the

average Small-Cap Return is

Superior

10-year rolling return

31 Dec 1935 to 31 Dec 2023

225

208

171

Small-caps

Mid-caps

Large-caps

Source: Furey Research Partners; as of 31/12/2023 and is the

most recent data available.

Indices used include: Large-Caps – S&P500

Index,

Mid-Caps – Russell MidCap

Index,

Small-Caps – Russell 2000,

Micro-Cap – Russell Microcap

Index.

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for the year ended 30 June 2024 3

Financial Statements

Key Benefits of Active US Small-

Cap Investing

Skilled, active small-cap managers can

outperform the broader equity markets

by using their experience, their deep

research and their consistent investment

processes across various market

environments. Key attractions include:

• Growth potential – younger, faster

growing companies earlier in their life

cycle.

• Sector/Industry breadth – wide array

of sectors and industries compared to

large-caps.

• Under-researched – less analyst

coverage contributes to mispricing and

opportunities.

• Active management – market

inefficiencies allow skilled stock-

pickers to outperform.

• Expanded opportunity set – vast

universe of around 2,000 US small-

caps (more than half of global listed

smaller companies).

• Diversification – lower correlation to

large-caps improves overall portfolio

efficiency.

• Lower risk – US listings generally have

higher governance standards relative

to global peers.

Brown Advisory’s Approach

Brown Advisory has been investing in

US companies of all sizes for over 25

years. It manages approximately $10

billion across small-cap strategies for

institutional, intermediary, and high net

worth clients. Clients benefit from Brown

Advisory’s extensive research capabilities

with a large team analysing the entire

US market. The firm also leverages a

broad network of venture capital, private

equity and corporate relationships.

Understanding the full spectrum of

private and public companies is key to

grasping the competitive landscape

and identifying companies that may

float in the future. Brown Advisory’s

disciplined research, teamwork, and

client-first culture help drive long-term

outperformance for clients, making it a

compelling portfolio manager.

Investment Philosophy

The portfolio management team’s ‘3G’

model focuses on durable growth, sound

governance, and scalable go-to-market

strategies, seeking positive change at the

margin to exploit market inefficiencies.

The result is a diversified portfolio

spanning sectors, business models, and

economic cycles.

In Summary

Offering diversification, growth potential

and a breadth of opportunities, US

small-caps deserve serious portfolio

consideration, in the Board’s view.

While individually small, collectively they

account for nearly three-quarters of all

US listed companies across a diverse mix

of sectors. Though sometimes neglected,

this niche allows skilled active managers

to unlock overlooked value. Despite

some higher risks, a modest small-

cap allocation can enhance portfolio

efficiency for patient, long-term investors

aiming to boost their returns.

“

”

US small-caps are

often – and we

believe mistakenly

– overlooked but

have the potential

to meaningfully

enhance long-

term returns for

patient investors.

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Brown Advisory US Smaller Companies plc

4 Annual Report and Financial Statements 2024

Investment Objective

The Company’s objective is to achieve

long-term capital growth by investing

in a diversified portfolio consisting

primarily of quoted US smaller and

medium-sized companies.

Investment Policy

The Portfolio Manager takes a

disciplined approach to investment,

emphasising long-term risk-adjusted

returns. The Portfolio Manager

believes that the US smaller and

medium-sized company sector

is a diverse and dynamic part of

the North American market and

continues to provide opportunities

for capital growth over the long

term. The sector is highly diversified

with a great many companies from

which to choose. Many companies

are relatively immature, whether

financially or operationally or in terms

of management or market position.

They tend to be highly geared to

growth and are particularly vulnerable

to market and other changes.

Against this background, the

Company has adopted an investment

style that focuses on companies

with durable growth, scalable go-to-

market strategies and well-aligned

management and shareholder

interests, and whose shares are

considered by the Portfolio Manager

to offer above-average capital

growth at attractive valuations. The

Portfolio Manager believes that this

is an excellent approach to long-term

investment in this sector.

Investment Objective, Investment Policy

and Benchmark

Benchmark Index

Sterling adjusted

Russell 2000 Total

Return Index (the

‘benchmark’).

Investment Limits

The Board has prescribed limits on

the investment policy, including:

 The Portfolio will comprise at all

times a minimum of 40 securities

(excluding cash);

 No single holding shall constitute

more than 5% of total assets at the

time of investment;

 No derivative instruments

(excluding warrants) may be held

without the prior approval of the

Board;

 Investments in unlisted securities

shall not exceed 5% of total assets

at the time of investment and any

such investments shall require

prior Board approval;

 The Company shall not make any

new investments in other UK listed

investment companies;

 In any event, not more than 10%

in aggregate of the total assets

of the Company, and any of its

subsidiaries, may be invested in

other closed-ended investment

funds (including listed investment

trusts) whether or not such funds

have stated investment policies to

invest no more than 15% of their

total assets in other listed closed-

ended investment funds (including

listed investment trusts);

 Borrowings, including overdraft

facilities, shall not exceed 20% of

the Company’s total assets and

shall require prior Board approval;

 The Company shall not take legal

or management control over any

investments in its portfolio.

Company Information

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for the year ended 30 June 2024 5

Financial Statements

Strategic Report

for the year ended 30 June 2024 5

Strategic Report Governance Company InformationFinancial Statements

Job No: 52458 Proof Event: 31 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

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Brown Advisory US Smaller Companies plc

6 Annual Report and Financial Statements 2024

Financial Highlights for the year ended

30 June 2024 Ordinary Share Performance

Net asset value (pence)*

1,471.4

+2.8% (2023: 1,431.9 )

Closing price (pence)

1,282.50

+5.1% (2023: 1,220.00 )

Russell 2000 Total Return Index

(sterling adjusted)

8,699.00

+10.7% (2023: 7,860.00)

Ongoing charges ratio (%)*

1.05

(2023: 1.00)

Discount to net asset value (%)*

(12.8)

(2023: (14.8))

Year ended

30 June

Net assets

£’000

Net asset

value per

Ordinary share

Year-on-year change in

net asset value per

Ordinary share

Year-on-year change in

Benchmark Index

2015 174,033 724.1 +5.5 +15.8

2016 174,163 78 7. 3 +8.7 +9.7

2017 181,687 911.1 +15.7 +28.2

2018 163,339 1,103.4 +21.1 +15.7

2019 161,520 1,152.7 +4.5 +0.3

2020 145,011 1,116.3 (3.2) (3.8)

2021 181,426 1,516.3 +35.8 +45.1

2022 155,840 1,303.9 (14.0) (15.2)

2023 171,147 1,431.9 +9.8 +7. 5

2024 174,544 1,471.4 +2.8 +10.7

* For definitions of the above Alternative Performance Measures please refer to the Glossary of Terms on pages 94 and 95.

Strategic Report Governance Company Information

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for the year ended 30 June 2024 7

Financial Statements

Chairman’s Statement

Over the twelve-month period, the

Company’s share price rose from

1,220.00p to 1,282.50p, an increase

of 5.1%. This resulted in a small

narrowing of the discount to NAV from

14.8% on 30 June 2023 to 12.8% on

30 June 2024. A small number of

shares were bought in over the course

of the year in accordance with the

revised buyback policy we outlined a

year ago.

Market Review

For the first four months of our

financial year, US equity markets

moved within a narrow trading range

amidst low volatility, reduced trading

volumes and restrained corporate

activity. Geopolitical risks remained

elevated as in Europe the war between

Russia and the Ukraine continued,

in the Far East dialogue between

China and Taiwan became more

strained and in the Middle East Israel

responded aggressively to the attacks

by terrorist organisation Hamas.

Surprisingly, these tensions had only

a limited impact on financial markets.

At the same time, US domestic news,

continued to be mixed, giving little

direction to markets as the debate

continued as to whether the economy

would be hitting a ‘hard’ or a ‘soft’

landing in 2024.

What influenced markets above

all in this period was the perceived

direction of US interest rates. With

official rates having reached a 22-year

high of between 5.25% and 5.50%

at the start of our year, the Federal

Reserve (Fed) reiterated its focus on

bringing inflation down to its 2.0%

target, suggesting that it still had ‘a

Stephen White

Chairman of the Board

Dear Fellow Shareholder,

For the twelve months ended 30 June 2024,

your Company’s net asset value (NAV)

per share rose from 1,431.9p to 1,471.4p,

an increase of 2.8%. This small gain was

somewhat disappointing, not only in absolute

terms as smaller companies in the US lagged

their larger peers for the third financial year

running, but also relative to our benchmark,

the sterling adjusted Russell 2000 Total

Return index, which rose by 10.7% over the

same period. An explanation of specific

portfolio factors in relation to performance

can be found in this statement as well as in the

Portfolio Manager’s review on pages 14 to 17.

Despite a difficult year, the Board reiterates

its confidence in Brown Advisory’s approach

and its optimism for the US smaller company

sector going forward.

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Brown Advisory US Smaller Companies plc

8 Annual Report and Financial Statements 2024

long way to go’, even if tight conditions

would weigh on economic activity.

Given this rhetoric and data that

showed the economy and jobs market

to be still in good shape, 10-year

bond yields moved steadily higher,

briefly touching 5.0% in October.

This restrained equity markets in this

period, and held back in particular the

smaller company sector, not helped

by investors continuing to favour the

mega-caps, particularly those now

known as the ‘Magnificent Seven’,

and other technology stocks with

any perceived connection to artificial

intelligence (AI).

In November, the mood in the

markets began to brighten again.

Hopes grew that, with improving

inflation numbers, mixed retail sales

and some softening in the jobs

market, the Fed’s tightening cycle

had come to an end and that a steady

programme of interest rate cuts lay in

store. Indeed, investors’ expectations

for rate cuts at this time moved well

ahead of those suggested by the

Fed in its famous post-meeting ‘dot

plots’, both in terms of timing and

of scope. Nonetheless, the Fed held

firm throughout the first half of 2024,

refusing to cut rates as it argued that,

despite some softening, the economy

and the jobs market remained

resilient, while inflation risks had

not gone away. It did acknowledge,

however, that the peak in rates had

probably been reached, but made

no promises as to when the first cut

would come. This was despite several

other major central banks cutting

interest rates towards the end of the

period.

Hoping that the Fed would soon

concede and cut rates, US equity

markets pushed steadily higher

from November onwards, without

any major setbacks, and closed our

financial year around their all-time

highs. Although the market leaders

were still the ‘Magnificent Seven’, and

other technology stocks linked to AI,

where news flow remained upbeat,

earnings continued to surprise

positively and valuations seemed

not unreasonable, other sectors

were also pulled higher in their wake.

This included small caps which until

then had spent much of the year

in the shadow of their larger peers,

but which met with some renewed

buying interest. Within the small cap

arena, similar trends were at play as

in large cap with the winners being

technology stocks, anything seen to

be AI related and momentum plays,

often driven higher by speculative

retail buying despite having poorer

fundamentals.

As mentioned at the beginning of

my statement, our performance

this year was disappointing, both

in absolute and in relative terms.

Top-down, our portfolio suffered

from being underweight financials, a

sector our Portfolio Managers tend

not to favour, having little exposure

to perceived AI plays for valuation

reasons, and avoiding the more

speculative, indebted, low-quality

earnings situations that enjoyed a

sudden rally in November/December.

Underperformance this year also

came from stock selection in two

specific areas, namely healthcare

and information technology, where

Chairman’s Statement continued

Russell 2000 (%)

10.1%

S&P 500 (%)

24.6%

NASDAQ (%)

29.6%

12 month return to

30 June 2024 in US$

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for the year ended 30 June 2024 9

Financial Statements

our portfolio was hit unexpectedly by

negative earnings surprises in a clutch

of our names, some of which had to

be reassessed and have since been

sold.

Key positive contributors to return

over the year were Casey’s General

Stores, Pinterest, Waste Connections,

Neurocrine Biosciences and Bright

Horizons, while the main detractors

were Accolade, SI-BONE, agilon

health, Rentokil Initial and Workiva.

Over the year, in US dollar terms, the

Russell 2000 returned 10.1%, the

S&P 500 returned 24.6% and the

Nasdaq returned 29.6%. The pound/

dollar rate was little changed over the

twelve-month period, moving from

1.2714 to 1.2641, because of which

sterling-based shareholders made no

currency gains this year.

Portfolio Manager and

Continuation Vote

A more detailed coverage on the

development of the US smaller

company sector over the past

twelve months and our activity

and performance is included in the

Portfolio Manager’s Review on pages

14 to 17.

With three years having passed

since Brown Advisory took over

the management of the portfolio in

June the Board undertook a detailed

review of the Trust’s investment

performance, its fee structure and

its remit to ensure that they remain

appropriate and relevant. Between

31 March 2021, the date from which

Brown Advisory commenced

management, and 31 March 2024 the

Trust’s NAV rose by 6.4%, compared

to an increase in the benchmark

of 8.9%, equivalent to annualised

returns over the three years of 2.1%

and 2.9% respectively. We had

hoped for better, particularly given

our Manager, Brown Advisory’s,

impressive long-term performance

record in its US smaller companies

strategy, which attracted us to

them in the first place and which

we have been following since their

appointment.

Over the three-year period,

sector allocation was the main

detractor to performance with

an underweight position in the oil

sector. Stock selection was more

positive, particularly in the more

growthy areas of healthcare and

information technology. Key positive

contributors to performance

over the three-year period were

Biohaven Pharmaceuticals, EVO

Payments, Mimecast Limited, Waste

Connections and Curtiss-Wright

Corp., while detractors included Angi,

Leslie’s, Azenta, Oak Street Health

and Natera.

The Board noted that, despite

the more challenging market

environment, the managers

maintained their investment

approach and their search for long-

term compounders that offer durable

growth, good governance and a

strong ‘go-to-market’ position, even

if this meant missing out on many

of the more momentum-driven and

speculative stocks which have led the

smaller companies markets of late.

“

”

Within the smaller

company sector,

similar trends

were at play as

in the large cap

space, with the

winners being

technology stocks,

anything seen to

be AI-related and

momentum plays.

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Brown Advisory US Smaller Companies plc

10 Annual Report and Financial Statements 2024

The Board will continue to monitor

closely investment performance,

both absolute and relative, on an

ongoing basis.

Finally, the Board, as part of its

ongoing review process, considered

the fees charged by the Manager in

relation to peers in the closed-end

and open-ended sectors to ensure

they remain both appropriate and

competitive.

In accordance with the three-year

cycle prescribed in the Company’s

Articles of Association, a continuation

vote was held at last year’s Annual

General Meeting. The resolution in

favour of continuation was passed

with 3,885,193 proxy votes or

90.5 percent in favour. The next

continuation vote will take place

at the Annual General Meeting in

November 2026. At its Strategy Day

in April, the Board also considered

again the Company’s investment

remit, strategy and performance

and ongoing viability and believes

that the Company’s offering remains

attractive.

Revenue and Capital Returns

The net gain per Ordinary share

was 38.57p, allocated (6.11p) to

Revenue and 44.68p to Capital.

Dividend income was higher as

some companies raised pay-outs

as confidence returned and interest

income benefited from the higher

interest rates. With management

expenses broadly unchanged, the net

revenue loss was marginally lower

than the previous year. The Board still

believes it appropriate to allocate all

expenses to the Revenue account. No

distributable revenue is available for

the payment of dividends.

Share Price and Discount

A year ago, the Board amended the

Company’s share buyback policy

which had been in place for several

years. Under the new policy, the

Board is committed to using share

buybacks with the aim of reducing

discount volatility and working to

reduce any discount to the extent that

it is significantly wider than those of

similar investment trusts.

Alongside this share buyback

policy, the Board believes that

the Company’s discount will also

be driven by demand for the

Company’s shares, reflecting its

long-term investment performance,

its relevance to investors, the

appropriate marketing of the

Company and general market

conditions.

Given that for much of the period the

discount was within our tolerated

range we only repurchased 90,000

shares. As at 30 June 2024, the

number of shares held in Treasury

was 6,361,254 (2023: 6,271,254) and

the total number in public hands was

11,862,159 (2023: 11,952,159).

Gearing

With the rise in interest rates, a mixed

earnings outlook and limited investor

interest in the sector, the Board saw

no good reason to deploy any gearing

over the year, and indeed preferred

to hold some cash in hand in case

of market setbacks. However, going

forward, should prospects for the

smaller company sector improve and

Chairman’s Statement continued

Closing price (pence)

1,282.50

Net Asset Value (pence)

1,471.4

Discount to net asset value

12.8%

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for the year ended 30 June 2024 11

Financial Statements

“

”

Against a

background of a

reasonably healthy

economy and

falling interest rates,

US equity markets

should continue

nonetheless to

perform well. More

importantly for

us, we see this

as a generally

favourable

background for

smaller companies,

particularly given

their long period of

underperformance

relative to their

larger peers.

investor interest return, the Board will

review its decision to gear, mindful

that the ability to do so to enhance

returns is one of the key advantages

of a closed-end structure.

Board Composition

In May, I was pleased to announce

the appointment of Ruth Beechey

as a non-executive Director, with

effect from 1 July 2024. We were

helped in our search by an external

recruitment agency which put

forward a strong, experienced and

diverse list of candidates to choose

from. Keen to recruit someone with a

legal background to replace the skill

set that will be lost when Lisa Booth

steps down, we chose Ruth. We see

her bringing considerable expertise

to the Board given her long career

as a lawyer in the fund management

industry, first at Deutsche Asset

Management and then at UBS

Asset Management UK. She is also

a non-executive director at Legal

and General Assurance (Pensions

Management) Ltd and the Investor

Forum.

As planned, to coincide with

Ruth’s arrival Clive Parritt, Senior

Independent Director (SID), stepped

down from the Board on 30 June

2024. I am delighted that his role

as SID has been taken on by Jane

Routledge. During Clive’s time as

a Director the Company benefited

hugely from his corporate and

accounting knowledge and business

acumen as a former president of the

Institute of Chartered Accountants in

England & Wales.

Finally, Lisa Booth will be retiring from

the Board at the AGM in November.

For several years, she was Chair of

the Audit and Risk Committee and

her background as a lawyer was of

great use to the Company, particularly

during the time of our change of

Manager. On behalf of the Board and

shareholders I would like therefore

to thank both Clive and Lisa for their

contribution to the success of the

Company over the past years and to

wish them the very best in the future.

With the full refreshing of the Board

since I became Chair in October

2021, four directors will be presenting

themselves for re-election/election

at the AGM in November, Jasper

Judd, Jane Routledge, Ruth Beechey

and myself. Although, following the

AGM, the Board will only comprise

four people, I believe that this

is appropriate for the size and

complexity of our Company and

that all the necessary skill sets are

represented, be they investment

management, accounting, marketing

or legal. If we feel the need for

additional skills and expertise, we

always have the scope to go back to

five.

The Board is aware of the FCA’s

Diversity and Inclusion Policy and

notes and supports their targets. Full

disclosure of the Board’s composition,

balance and diversity is given on

pages 52 to 54. The Board’s aim

above all is to create and maintain a

Board that has the appropriate mix

of skills, diversity of thought and a

collegiate culture drawn from as wide

a pool as possible.

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Brown Advisory US Smaller Companies plc

12 Annual Report and Financial Statements 2024

Annual General Meeting

This year’s AGM will be held on

Monday, 4 November 2024 at 2.00pm

at the offices of Brown Advisory, 18

Hanover Square, London W1S 1JY. It

will include a short presentation via

video-link by Chris Berrier, Portfolio

Manager, covering the performance

of the Company over the past

year as well as his outlook for the

future. The Board and Portfolio

Manager would welcome questions

which shareholders may submit

to: InvestmentTrustEnquiries@

brownadvisory.com Subject to

confidentiality, we will respond to any

questions submitted either directly

or by publishing our response on the

Company website.

Electronic proxy voting is now

available, and shareholders are

encouraged to submit voting

instructions using the web-

based voting facility www.

eproxyappointment.com and

www.proxymity.io for institutional

shareholders. In order to use

electronic proxy voting, shareholders

will require their shareholder

registration number, control

number and pin. If you do not have

access to these details please

contact the Company’s Registrar,

Computershare, whose details can be

found on page 104 of this report.

Notice of the AGM, containing

full details of the business to be

conducted at the meeting, is set out

on pages 96 and 97 of this report.

Shareholder Communications

The Board encourages shareholders

to visit the Company’s website

(www.brownadvisory.com/basc) for

the latest information, podcasts and

monthly factsheets.

Outlook

So far in 2024, the US economy

has continued to perform well, and

the recession forecast by many has

again failed to materialise. Consumer

spending has been the linchpin of

the economy, driven by jobs growth,

rising wages and the drawdown

of savings accumulated from the

pandemic period. At the same time,

investment spending has held up well

due to government incentives and

the move towards reshoring given the

rising geopolitical and supply chain

risks. The Board sees these trends

continuing and the US economy

remaining resilient. At the same time,

market expectations are for inflation

to move back towards the Fed’s

targeted range, enabling the latter

to embark on its much-anticipated

programme of interest rate cuts as of

the autumn. Certainly, the tone of the

US central bank has been softening

over the summer, as evidenced by

Jerome Powell’s speech at the recent

Jackson Hole symposium where the

chair of the Fed declared that ‘the

time has come for policy to adjust’.

Against a background of a reasonably

healthy economy and falling interest

rates, US equity markets will hopefully

continue nonetheless to perform well.

More importantly for us, we see this as

a generally favourable background for

smaller companies, particularly given

Chairman’s Statement continued

“

”

Despite a difficult

year, the Board

reiterates its

confidence in

Brown Advisory’s

approach and

remains optimistic

for the US smaller

company sector

going forward.

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for the year ended 30 June 2024 13

Financial Statements

their long period of underperformance

relative to their larger peers. Smaller

companies tend to have higher

amounts of debt and at floating rates

and thus benefit proportionally more

as interest rates fall. They tend to be

under-owned by investors, particularly

true of late given the massive exposure

that many have built up in the

‘Magnificent Seven’ stocks and the

technology sector at the expense of all

other areas.

They are likely to benefit more from the

reshoring trend given their domestic

economy bias and finally they offer

greater value trading at multiples well

below their larger peers and their own

long-term averages. That is not to say

that the US smaller company sector

won’t be affected by bouts of volatility

in world markets resulting from the

ongoing geopolitical issues, notably

tensions in East Asia and Ukraine, not

to mention closer to home with the

forthcoming presidential election in

November in the US.

In conclusion, after a period of dull

returns from US small cap, we see a

more favourable picture going forward,

for all the reasons cited above. At the

same time, we also see a return to

the fore of our Manager’s investment

style with its focus on earnings

analysis, cash flow generation and

balance sheet quality, rather than

on speculation and momentum. We

believe our portfolio is well placed to

take advantage of this situation.

Stephen White

Chairman of the Board

20 September 2024

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Brown Advisory US Smaller Companies plc

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Market Overview

The market has been through

some unusual times in the past few

years. The COVID-19 pandemic led

to stimulus cheques and very low

interest rates, causing markets to

soar. However, in 2022 skyrocketing

valuations and rampant inflation

forced the Federal Reserve to

take a stricter approach, causing

growth stocks to fall. Traditional

growth sectors like technology and

healthcare initially struggled. While

healthcare remains under pressure,

the information technology sector

rebounded in late 2023 thanks to

innovations like generative artificial

intelligence, leading to a historic

period of market concentration.

In the small-cap space, Super Micro

Computer, Inc. (SMCI) became

the first company to be included in

both the Russell 2000 Index and

the S&P 500 Index simultaneously.

MicroStrategy Inc. (MSTR), which

holds a large position in bitcoin, also

saw staggering gains. The largest 15

names in the Russell 2000 Growth

Index produced a weighted average

gain of 77.5% in the first half of 2024 –

this is extremely unusual.

Our Strategy’s Performance

Our strategy has seen both highs

and lows over the last few years.

Our downside protection helped

us endure the challenges of 2022,

posting a smaller decline against

the benchmark. However, in late

2023, it became increasingly difficult

to keep up with our benchmark as

market concentration accelerated

and individual investors swelled.

Portfolio Manager’s Review

Chris Berrier

Portfolio Manager

Performance review

For the 12 months ending June 30, 2024, our

portfolio unfortunately did not keep up with

our benchmark, the Sterling-adjusted Russell

2000

Total Return Index. During the year, the

Company’s NAV increased by 2.8% compared

to the benchmark return of 10.7%

. Several

factors contributed to this underperformance,

which we’ll explain below.

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for the year ended 30 June 2024 15

Financial Statements

Individual investors, also known as

retail investors, are non-professional

market participants who trade

securities for their personal accounts.

The surge in their activity can

significantly impact market dynamics,

leading to increased volatility and

price shifts.

These market dynamics led to a

small-cap benchmark that had

become somewhat distorted, with

the largest constituent of the Russell

2000 Index, SMCI, valued at $46bn

by the end of May 2024. The index

was rebalanced in late June 2024,

removing some of these outliers.

Following SMCI’s exit from the index,

the maximum market capitalisation

drops to just under $11 billion. This

results in an index more aligned with

our present portfolio weights. We are

modestly underweight in healthcare

and closely aligned with the

benchmark in information technology.

Additionally, we are overweight in

Industrials, including a 5%+ position

in waste management companies,

which are likely better mapped as

utilities or consumer staples.

Our strategy’s monthly tracking

error has risen from around 1.5%

pre-COVID to nearly 2.4% post-

COVID. Tracking error measures the

difference between the performance

of a portfolio and its benchmark. It

is often used to assess how closely a

portfolio follows the index to which it is

benchmarked. A higher tracking error

indicates more significant deviations

from the benchmark, while a lower

tracking error suggests the portfolio

is closely aligned with the benchmark.

Despite this increase, we remain

committed to our philosophy and

process. While our portfolio’s relative

swings can be significantly positive

or negative over short periods, our

portfolio’s long-term fortunes will

be governed by the fundamental

progress of the companies in which

we invest. We continue to remain

active, adding to our winners,

reducing or selling poorer performers,

and adding new positions with

favourable risk/reward profiles.

Key Factors Impacting

Performance

 Most of our fiscal year relative

underperformance occurred in the

final weeks of 2023. Our strategy

was ahead of the Russell 2000

Index and roughly tied with the

Russell 2000 Growth Index for

the calendar year as we entered

the month of November last year.

However, people became excited

about the possibility that the

Federal Reserve might switch to a

less strict policy which prompted a

classic, lower quality, risk-on rally—

where investors flock to higher-risk

assets hoping for greater returns—

resulting in our higher quality

portfolio struggling. This led to us

lagging the Russell 2000 Index by

about 5% during the November-

December rally.

 The absence of Super Micro

Computer (SMCI) and

MicroStrategy (MSTR) in our

portfolio hurt results. Despite

examining these stocks over

the years, they did not align

with our “3G” investment filter.

“

”

These market

dynamics led

to a small-cap

benchmark that

had become

somewhat

distorted, with the

largest constituent

of the Russell

2000 Index, SMCI,

valued at $46bn

by the end of May

2024.

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Brown Advisory US Smaller Companies plc

16 Annual Report and Financial Statements 2024

Russell’s decision to retain these

high market cap stocks in the

benchmark until very recently

proved detrimental, negatively

impacting our relative returns.

 Subpar results in healthcare

dampened returns. Compared

to the Russell 2000, we had

our largest sector overweight in

healthcare during the fiscal year,

and our healthcare stocks returned

roughly -10.4% vs. the -1.8% return

for those in the benchmark

Although a few companies

underperformed our expectations,

some holdings fell on little negative

news.

Additions and Disposals

Over the twelve-month period, we saw

a roughly equal number of additions

and deletions in the portfolio. Much

of the turnover was driven by M&A

activity and our decision to exit

positions where our investment thesis

was no longer valid or where we saw

poor risk/reward dynamics.

Over the twelve-month period, we

made several strategic exits from

our portfolio, driven by mergers

and acquisitions (M&A) activity,

invalidation of our investment thesis,

or again poor risk/reward dynamics.

Specifically, we sold agilon

health, Bentley Systems, Knight-

Swift Transportation, XPEL, Inc.,

Choice Hotels, Genpact, Karuna

Therapeutics, Abcam, Denbury

Inc, and Angi Inc. These sales

were made to ensure our portfolio

remained aligned with our investment

philosophy and to focus on positions

with more favorable risk/reward

profiles.

We also exited Definitive Healthcare,

Sprout Social, Alignment Healthcare,

Azenta, and Leslie’s due to

disappointing performance or

concerns about future profitability.

Astera Labs and Loar Holdings Inc.

were sold after significant price

increases following their IPOs.

MakeMyTrip was sold after strong

performance, but we remain cautious

about future competition.

We were able to redeploy the

proceeds from these sales into a

diverse collection of businesses that

we hope to own for the next several

years.

Portfolio Manager’s Review continued

“

”

While our relative

swings can be

significantly

positive or

negative over

short periods,

our long-term

fortunes will be

governed by the

fundamental

progress of the

companies that

we invest in.

Source: Factset as at 30 June 2023.

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for the year ended 30 June 2024 17

Financial Statements

Notable additions include Applied

Industrial Technologies, a leading

distributor of industrial machinery

with strong market positioning;

Haemonetics, which is using its strong

cash flow to drive significant earnings

growth through acquisitions; Kadant,

a high-quality industrial company

with a proven management team; and

Vaxcyte, a biotechnology firm with a

promising pneumococcal vaccine. We

believe these companies offer strong

long-term growth potential and align

well with our investment philosophy.

Focus on Quality Decisions

In challenging times, our commitment

is to high quality decision-making,

acknowledging that not all choices

will be perfect. Nonetheless, our

investment team is actively adding

new prospects to our portfolio, which

we believe will contribute to long-term

risk-adjusted performance.

While our investment approach is

not constrained by the composition

of our benchmark, the continuing

rise of passive investing means we

have to be more aware than ever of

the impact of index inclusion on a

company’s share price, particularly

during periods of market volativity.

As such, to avoid future oversights

we have enhanced our investment

process to ensure we have an

informed perspective on all top index

names that meet our “3G” criteria but

we don’t yet own.

We’re grateful for your patience

with short-term performance

fluctuations. Our enduring objective is

to outperform small-cap benchmarks

with reduced risk, a goal we’ve

achieved as an investment team over

the past 18 years. As the investment

landscape evolves, so too does our

strategy, ensuring we stay ahead in a

dynamic market.

Portfolio Manager

Brown Advisory LLC

20 September 2024

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Brown Advisory US Smaller Companies plc

18 Annual Report and Financial Statements 2024

Twenty Largest Equity Holdings

as at 30 June 2024

Market value (£‘000)

7,724

(2023: 6,255)

Market value (£‘000)

6,125

(2023: 5,086)

Market value (£‘000)

4,364

(2023: 3,498)

Market value (£‘000)

4,343

(2023: 4,050)

Percentage of Portfolio

4.6

(2023: 3.9)

Percentage of Portfolio

3.7

(2023: 3.2)

Percentage of Portfolio

2.6

(2023: 2.2)

Percentage of Portfolio

2.6

(2023: 2.6)

Waste Connections

Bright Horizons Family

Solutions

ChampionX

Casey’s General Stores

Industrials

Waste Connections, Inc. provides non-hazardous solid

waste collection services for commercial, industrial,

and residential customers. The company offers

collection, landfill disposal, and recycling services

for various recyclable materials, including compost,

cardboard, office paper, plastic containers, glass

bottles, and ferrous and aluminium metals.

Consumer Discretionary

Bright Horizons Family Solutions Inc. provides

childcare and early education services as well as other

services designed to help employers and families to

better address the challenges of work and life. The

company provides services primarily under multi-year

contracts with employers who offer childcare and other

dependent care solutions as part of their employee

benefits packages.

Energy

ChampionX Corporation provides energy solutions.

The company focuses on upstream and midstream

oilfield technology such as chemistry programs and

drilling activities. ChampionX serves customers

worldwide.

Consumer Staples

Casey’s General Stores, Inc. operates convenience

stores in the Midwest. The company offers food,

beverages, tobacco products, health and beauty aids,

automotive supplies, and other non-food items, as well

as selling gasoline.

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Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

for the year ended 30 June 2024 19

Financial Statements

Market value (£‘000)

4,256

(2023: 2,170)

Market value (£‘000)

4,168

(2023: 4,003)

Market value (£‘000)

4,081

(2023: 2,778)

Market value (£‘000)

3,961

(2023: 3,633)

Percentage of Portfolio

2.6

(2023: 1.4)

Percentage of Portfolio

2.5

(2023: 2.5)

Percentage of Portfolio

2.5

(2023: 1.8)

Percentage of Portfolio

2.4

(2023: 2.3)

Valmont Industries

SPDR S&P Biotech ETF

Neurocrine Biosciences

Prosperity Bancshares

Industrials

Valmont Industries, Inc. designs and manufactures

poles, towers, and structures for lighting,

communication, and utility markets and provides

protective coating services for infrastructure. The

company also manufactures and distributes industrial

and agricultural irrigation products in addition to a

wide variety of fabricated products for commercial and

industrial applications.

Biotechnology

SPDR S&P Biotech ETF is an exchange-traded fund

incorporated in the US. The Fund seeks to replicate

the performance of the S&P Biotechnology Select

Industry Index, an equal-weighted index. The index

tracks all the US common stocks listed on the NYSE,

American Stock Exchange, NASDAQ National Market

and NASDAQ Small Cap exchanges.

Healthcare

Neurocrine Biosciences, Inc. is focused on the

discovery and development of therapeutics

for neuropsychiatric, neuroinflammatory and

neurodegenerative diseases and disorders. The

company is developing therapeutic interventions for

anxiety, depression, Alzheimer’s disease, insomnia,

stroke, malignant brain tumours, multiple sclerosis,

obesity and diabetes.

Financials

Prosperity Bancshares, Inc. is the holding company

for Prosperity Bank. The Bank attracts deposits from

the general public and uses those funds to originate a

variety of commercial and consumer loans. Prosperity

Bank operates in the greater Houston metropolitan

area and neighbouring counties in Texas.

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Brown Advisory US Smaller Companies plc

20 Annual Report and Financial Statements 2024

Market value (£‘000)

3,771

(2023: 3,742)

Market value (£‘000)

3,646

(2023: 2,620)

Market value (£‘000)

3,638

(2023: 3,044)

Percentage of Portfolio

2.3

(2023: 2.4)

Percentage of Portfolio

2.2

(2023: 1.6)

Percentage of Portfolio

2.2

(2023: 1.9)

Dynatrace

Encompass Health

Information Technology

Dynatrace, Inc., through its subsidiaries, develops

software intelligence platforms for the enterprise cloud.

Its software intelligence platforms allow customers to

modernize and automate IT operations, develop and

release high quality software faster and improve user

experiences for better business outcomes.

Healthcare

Encompass Health provides inpatient rehabilitative

healthcare services. The company operates inpatient

rehabilitation hospitals, outpatient and rehabilitation

satellites, and home health agencies. Encompass

Health provides treatment on both an inpatient and

outpatient basis.

Healthcare

HealthEquity, Inc. provides technology-enabled

services platforms that allow consumers to make

healthcare saving and spending decisions. The

company enables consumers to access their tax-

advantaged healthcare savings, compare treatment

options, pay healthcare bills, receive personalised

benefit and clinical information and earn wellness

incentives.

Market value (£‘000)

3,479

(2023: 2,831)

Percentage of Portfolio

2.1

(2023: 1.8)

Entegris

Information Technology

Entegris, Inc. provides materials management products

and services to the microelectronics industry on a

worldwide basis. The company provides products

such as wafer shippers, wafer transport and process

carriers, pods and work-in-process boxes. Entegris also

provides chemical delivery products such as valves,

fittings, tubing, pipe and containers.

HealthEquity

Twenty Largest Equity Holdings continued

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for the year ended 30 June 2024 21

Financial Statements

Market value (£‘000)

3,345

(2023: 3,091)

Market value (£‘000)

3,332

(2023: 1,208)

Market value (£‘000)

3,321

(2023: 2,344)

Market value (£‘000)

3,272

(2023: 2,388)

Percentage of Portfolio

2.0

(2023: 1.9)

Percentage of Portfolio

2.0

(2023: 0.8)

Percentage of Portfolio

2.0

(2023: 1.5)

Percentage of Portfolio

2.0

(2023: 1.5)

HB Fuller

Casella Waste Systems

Phreesia

NeoGenomics

Materials

H.B. Fuller Company manufactures and markets

adhesives, sealants, coatings, paints and other

specialty chemical products worldwide. The company’s

products are sold in countries that include North

America, Europe, Latin America, the Asia Pacific

region, India, the Middle East, and Africa.

Industrials

Casella Waste Systems integrated and non-hazardous

solid waste services throughout the Eastern United

States. The company offers collection, transfer,

disposal and recycling services, generates steam, and

manufactures finished products utilising recyclable

materials.

Information Technology

Phreesia Inc. designs and develops healthcare software.

The company offers solutions for appointments, regis-

tration, clinical support, patient surveys, and analysis

and reports. Phreesia serves patients and doctors in the

United States.

Healthcare

NeoGenomics operates a network of clinical

laboratories that specialises in cancer genetics

diagnostic testing services. The company’s

services include cytogenetics, fluorescence in-situ

hybridization (FISH), flow cytometry, morphology,

anatomic pathology, and molecular genetic testing.

NeoGenomics serves pathologists, oncologists,

urologists and hospitals.

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Brown Advisory US Smaller Companies plc

22 Annual Report and Financial Statements 2024

Market value (£‘000)

3,190

(2023: 2,674)

Market value (£‘000)

3,145

(2023: 2,900)

Market value (£‘000)

3,052

(2023: 301)

Market value (£‘000)

2,979

(2023: 1,814)

Percentage of Portfolio

1.9

(2023: 1.7)

Percentage of Portfolio

1.9

(2023: 1.8)

Percentage of Portfolio

1.8

(2023: 0.2)

Percentage of Portfolio

1.8

(2023: 1.1)

Bruker

MSA Safety

CCC Intelligent Solutions

Holdings

Envestnet

Healthcare

Bruker Corporation designs, manufactures, and

markets proprietary life science systems based on

spectrometry technology platforms. The company also

sells a range of field analytical systems for substance

detection and pathogen identification. Bruker develops

life science and advanced materials research tools

based on X-ray technology.

Industrials

MSA Safety Inc. develops, manufactures and supplies

safety products that protect people and facility

infrastructures. The company’s core products include

self-contained breathing apparatus, fixed gas and

flame detection systems, portable gas detection, head

protection and fall protection products.

Industrials

Provides cloud-based software as a service (SaaS)

platform connecting trading partners, facilitating

commerce and supporting mission-critical, artificial

intelligence-enabled digital workflows.

Information Technology

Envestnet, Inc. provides intelligent systems to the

nation’s banks and registered investment advisors. The

company’s innovative technology and services allows

clients to achieve improved financial outcomes and

make financial wellness attainable.

Market value (£‘000)

79,192

Percentage of Portfolio

47.7

Total

The value of the twenty largest holdings represents

£79.2 million (2023: £69.6 million) and 47.8% (2023:

43.8%) of the Company’s total investments.

Twenty Largest Equity Holdings continued

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for the year ended 30 June 2024 23

Financial Statements

List of Investments as at 30 June 2024

Biotechnology*

2.5% (2023: 3.5%)

Total Market value (£‘000)

4,168

Total Percentage of Portfolio

2.5

SPDR S&P Biotech ETF

Exists as exchange Traded Fund

Total Market value (£‘000)

4,168

Total Percentage of Portfolio

2.5

Communication Services*

2.5% (2023: 4.5%)

Total Market value (£‘000)

4,201

Total Percentage of Portfolio

2.5

Operates a pinboard-style photo-sharing website

Total Market value (£‘000)

2,544

Total Percentage of Portfolio

1.5

Cogent Communications Holdings

Provides internet access, private network and data center

colocation services

Total Market value (£‘000)

1,657

Total Percentage of Portfolio

1.0

Consumer Discretionary*

8.8% (2023: 11.7%)

Total Market value (£‘000)

14,617

Total Percentage of Portfolio

8.8

Bright Horizons Family Solutions

Provides child care and educational services

Total Market value (£‘000)

6,125

Total Percentage of Portfolio

3.7

Mister Car Wash

Provides car wash services

Total Market value (£‘000)

2,633

Total Percentage of Portfolio

1.6

FTI Consulting

Provides business advisory services

Total Market value (£‘000)

2,429

Total Percentage of Portfolio

1.5

TopBuild

Installs and distributes insulation and other building

material products

Total Market value (£‘000)

1,219

Total Percentage of Portfolio

0.7

Clarus

Manufactures outdoor sporting equipment

Total Market value (£‘000)

718

Total Percentage of Portfolio

0.4

Churchill Downs

Operates as a racing, online wagering and gaming

entertainment company

Total Market value (£‘000)

648

Total Percentage of Portfolio

0.4

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Brown Advisory US Smaller Companies plc

24 Annual Report and Financial Statements 2024

Consumer Staples*

3.1% (2023: 3.7%)

Total Market value (£‘000)

5,077

Total Percentage of Portfolio

3.1

Casey’s General Stores

Operates convenience stores and gasoline stations

Total Market value (£‘000)

4,343

Total Percentage of Portfolio

2.6

Simply Good Foods

Engages in the development, marketing, and sale of

nutritional food and snack products

Total Market value (£‘000)

734

Total Percentage of Portfolio

0.5

Consumer Discretionary* continued

First Watch Restaurant Group

Owns and operates restaurants

Total Market value (£‘000)

500

Total Percentage of Portfolio

0.3

Vizio Holding

Operates as an entertainment platform

Total Market value (£‘000)

345

Total Percentage of Portfolio

0.2

Energy*

3.9% (2023: 5.0%)

Total Market value (£‘000)

6,526

Total Percentage of Portfolio

3.9

ChampionX

Produces chemicals and equipment for oil and gas drilling

industries

Total Market value (£‘000)

4,364

Total Percentage of Portfolio

2.6

Cactus

Designs, manufactures, sells and rents wellheads &

pressure control equipment for oil & gas industry

Total Market value (£‘000)

1,258

Total Percentage of Portfolio

0.8

Oceaneering International

Operates as a technology company that provides

engineered services and products & robotic solutions

to the offshore energy, defence, aerospace and

entertainment industries

Total Market value (£‘000)

904

Total Percentage of Portfolio

0.5

List of Investments continued

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for the year ended 30 June 2024 25

Financial Statements

Healthcare*

20.8% (2023: 20.2%)

Total Market value (£‘000)

34,349

Total Percentage of Portfolio

20.8

Neurocrine Biosciences

Manufactures and markets pharmaceuticals for the

treatment of neurological, endocrine and psychiatric-

based diseases and disorders

Total Market value (£‘000)

4,081

Total Percentage of Portfolio

2.5

Encompass Health

Engages in the provision of post-acute healthcare services

Total Market value (£‘000)

3,646

Total Percentage of Portfolio

2.2

HealthEquity

Provides range of solutions for managing health care

accounts

Total Market value (£‘000)

3,638

Total Percentage of Portfolio

2.2

NeoGenomics

Manufactures and markets pharmaceuticals for the

treatment of neurological, endocrine and psychiatric-

based diseases and disorders

Total Market value (£‘000)

3,272

Total Percentage of Portfolio

2.0

Bruker

Manufactures analytical and medical instruments

Total Market value (£‘000)

3,190

Total Percentage of Portfolio

1.9

Establishment Labs Holdings

Designs, develops and manufactures medical products

Total Market value (£‘000)

2,790

Total Percentage of Portfolio

1.7

Financials*

4.8% (2023: 2.8%)

Total Market value (£‘000)

7,867

Total Percentage of Portfolio

4.8

Prosperity Bancshares

Operates as a bank holding company whose subsidiary

provides banking services

Total Market value (£‘000)

3,961

Total Percentage of Portfolio

2.4

WEX

Provides payment processing and information management

services

Total Market value (£‘000)

2,467

Total Percentage of Portfolio

1.5

Houlihan Lokey

Provides investment banking services

Total Market value (£‘000)

1,439

Total Percentage of Portfolio

0.9

Job No: 52458 Proof Event: 31 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

Brown Advisory US Smaller Companies plc

26 Annual Report and Financial Statements 2024

Healthcare continued*

Inari Medical

Develops minimally-invasive, catheter-based mechanical

thrombectomy devices

Total Market value (£‘000)

2,025

Total Percentage of Portfolio

1.2

Bio-Techne

Manufactures and sells biological products

Total Market value (£‘000)

1,751

Total Percentage of Portfolio

1.0

Blueprint Medicines

Develops cancer therapies that harness the growing

understanding of the molecular blueprint of cancer

Total Market value (£‘000)

1,710

Total Percentage of Portfolio

1.0

Ascendis Pharma, ADR

Develops drug candidates

Total Market value (£‘000)

1,590

Total Percentage of Portfolio

1.0

SI-BONE

Operates as a sacroiliac joint medical device company

Total Market value (£‘000)

1,290

Total Percentage of Portfolio

0.8

OrthoPediatrics

Manufactures and distributes orthopedic devices

Total Market value (£‘000)

1,098

Total Percentage of Portfolio

0.7

Cytokinetics

Operates as a biopharmaceutical company that discovers,

develops and commercializes novel drug products

Total Market value (£‘000)

942

Total Percentage of Portfolio

0.6

Vaxcyte

Develops vaccines for infectious diseases

Total Market value (£‘000)

865

Total Percentage of Portfolio

0.5

Haemonetics

Designs, manufactures, markets and services blood

processing systems

Total Market value (£‘000)

788

Total Percentage of Portfolio

0.5

LifeStance Health Group

Operates as a holding company with interests in providing

outpatient mental health, spanning psychiatric evaluations

& treatment, psychological and neuropsychological

testing services

Total Market value (£‘000)

756

Total Percentage of Portfolio

0.5

Accolade

Provides healthcare IT services

Total Market value (£‘000)

557

Total Percentage of Portfolio

0.3

List of Investments continued

Strategic Report Governance Company Information

Job No: 52458 Proof Event: 31 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

for the year ended 30 June 2024 27

Financial Statements

Industrials*

27. 3% (2023: 19.5%)

Total Market value (£‘000)

45,415

Total Percentage of Portfolio

27.3

Waste Connections

Provides waste collection, landfill, recycling, disposal and

treatment services

Total Market value (£‘000)

7,724

Total Percentage of Portfolio

4.6

Valmont Industries

Manufactures and produces fabricated metal products,

steel and aluminum pole, tower and other structures

Total Market value (£‘000)

4,256

Total Percentage of Portfolio

2.6

Casella Waste Systems

Provides solid waste collection and waste management

services

Total Market value (£‘000)

3,332

Total Percentage of Portfolio

2.0

MSA Safety

Manufactures safety products

Total Market value (£‘000)

3,145

Total Percentage of Portfolio

1.9

CCC Intelligent Solutions Holdings

Provides cloud based technologies and applications for

the property and casualty insurance industry

Total Market value (£‘000)

3,052

Total Percentage of Portfolio

1.8

Fluor

Provides engineering, procurement, construction and

maintenance services

Total Market value (£‘000)

2,813

Total Percentage of Portfolio

1.7

Woodward

Designs, manufactures and provides energy control and

optimization solutions

Total Market value (£‘000)

2,632

Total Percentage of Portfolio

1.6

Healthcare continued*

Immunome

Operates as a biopharmaceutical company which

discovers, develops and commercializes antibody

therapeutics

Total Market value (£‘000)

193

Total Percentage of Portfolio

0.1

Arvinas

Engages in discovery, development and

commercialization of therapies to degrade disease-

causing proteins

Total Market value (£‘000)

167

Total Percentage of Portfolio

0.1

Job No: 52458 Proof Event: 31 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

Brown Advisory US Smaller Companies plc

28 Annual Report and Financial Statements 2024

List of Investments continued

Industrials continued

Rentokil Initial, ADR

Provides pest control, hygiene and work wear services

Total Market value (£‘000)

2,476

Total Percentage of Portfolio

1.5

Zurn Elkay Water Solutions

Manufactures professional grade water control and safety

products

Total Market value (£‘000)

1,983

Total Percentage of Portfolio

1.2

Clear Secure

Develops biometric identity verification technology

platform

Total Market value (£‘000)

1,935

Total Percentage of Portfolio

1.2

Enpro

Manufactures and markets engineered industrial products

Total Market value (£‘000)

1,754

Total Percentage of Portfolio

1.0

AZEK

Manufactures building products

Total Market value (£‘000)

1,605

Total Percentage of Portfolio

1.0

IDEX

Manufactures and supplies industrial pumps & other

engineering equipment

Total Market value (£‘000)

1,574

Total Percentage of Portfolio

0.9

Mueller Water Products

Manufactures and distributes water infrastructure, flow

control and piping component system products for use in

water distribution networks and water treatment facilities

Total Market value (£‘000)

1,547

Total Percentage of Portfolio

0.9

Kadant

Develops, manufactures and markets equipment &

products for the papermaking and paper recycling

industries

Total Market value (£‘000)

1,432

Total Percentage of Portfolio

0.9

SiteOne Landscape Supply

Distributes commercial and residential landscape supplies

Total Market value (£‘000)

1,393

Total Percentage of Portfolio

0.8

SPX Technologies

Manufactures and distributes industrial components

Total Market value (£‘000)

1,264

Total Percentage of Portfolio

0.8

Strategic Report Governance Company Information

Job No: 52458 Proof Event: 31 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

for the year ended 30 June 2024 29

Financial Statements

Information Technology*

20.8% (2023: 23.3%)

Total Market value (£‘000)

34,703

Total Percentage of Portfolio

20.8

Dynatrace

Develops software for digital and application performance

management

Total Market value (£‘000)

3,771

Total Percentage of Portfolio

2.3

Entegris

Manufactures and supplies critical materials for the

semiconductor, data storage & pharmaceutical industries

Total Market value (£‘000)

3,479

Total Percentage of Portfolio

2.1

Phreesia

Develops and operates software platform for patient

management

Total Market value (£‘000)

3,321

Total Percentage of Portfolio

2.0

Envestnet

Provides wealth management software and services to

financial advisors and institutions

Total Market value (£‘000)

2,979

Total Percentage of Portfolio

1.8

Curtiss-Wright

Provides high tech, critical function products, systems and

services to the commercial, industrial, defense and power

markets

Total Market value (£‘000)

2,596

Total Percentage of Portfolio

1.6

Infinera

Provides optical transport networking equipment,

software and services to telecommunications carriers

Total Market value (£‘000)

2,277

Total Percentage of Portfolio

1.4

Littelfuse

Manufactures fuses and circuit protection devices

Total Market value (£‘000)

2,057

Total Percentage of Portfolio

1.2

PROS Holdings

Provides pricing and revenue optimization software

Total Market value (£‘000)

2,011

Total Percentage of Portfolio

1.2

Industrials continued*

Applied Industrial Technologies

Distributes bearings, power transmission components

and other industrial products

Total Market value (£‘000)

1,047

Total Percentage of Portfolio

0.6

John Bean Technologies

Designs and manufactures food processing and ground

support equipment for the aviation industry

Total Market value (£‘000)

451

Total Percentage of Portfolio

0.3

Job No: 52458 Proof Event: 31 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

Brown Advisory US Smaller Companies plc

30 Annual Report and Financial Statements 2024

List of Investments continued

Information Technology* continued*

Guidewire Software

Develops software platform for property and casualty

insurers

Total Market value (£‘000)

2,007

Total Percentage of Portfolio

1.2

Workiva

Provides a cloud-based software platform that enables

organizations to collect and analyze data for compliance &

management reporting

Total Market value (£‘000)

1,953

Total Percentage of Portfolio

1.2

SiTime

Develops and manufactures analog semiconductors

Total Market value (£‘000)

1,876

Total Percentage of Portfolio

1.1

Power Integrations

Designs, develops, manufactures and markets

proprietary, high-voltage, analog & mixed-signal integrated

circuits and high-voltage diodes

Total Market value (£‘000)

1,698

Total Percentage of Portfolio

1.0

BlackLine

Provides cloud-based solutions for accounting and finance

operations

Total Market value (£‘000)

1,220

Total Percentage of Portfolio

0.7

Lattice Semiconductor

Designs, develops, and markets high-speed

programmable logic devices

Total Market value (£‘000)

1,210

Total Percentage of Portfolio

0.7

Take-Two Interactive Software

Develops, markets and publishes interactive

entertainment software

Total Market value (£‘000)

952

Total Percentage of Portfolio

0.6

Onto Innovation

Develops process control systems

Total Market value (£‘000)

738

Total Percentage of Portfolio

0.4

Clearwater Analytics

Develops and operates software as a service platform for

investment data aggregation, accounting, analytics and

reporting services

Total Market value (£‘000)

558

Total Percentage of Portfolio

0.3

Strategic Report Governance Company Information

Job No: 52458 Proof Event: 31 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

for the year ended 30 June 2024 31

Financial Statements

Materials*

3.5% (2023: 3.7%)

Total Market value (£‘000)

5,823

Total Percentage of Portfolio

3.5

HB Fuller

Manufactures and markets adhesives, sealants and other

chemical products

Total Market value (£‘000)

3,345

Total Percentage of Portfolio

2.0

Quaker Houghton

Engages in the business of developing, producing and

marketing formulated chemical specialty products

Total Market value (£‘000)

2,478

Total Percentage of Portfolio

1.5

Real Estate*

2.0% (2023: 2.1%)

Total Market value (£‘000)

3,179

Total Percentage of Portfolio

2.0

EastGroup Properties

Operates an industrial real estate investment trust

Total Market value (£‘000)

2,573

Total Percentage of Portfolio

1.6

DigitalBridge Group

Owns, operates and invests in infrastructure projects

Total Market value (£‘000)

606

Total Percentage of Portfolio

0.4

Total Investments

Total Market value (£‘000)

165,925

Total Percentage of Portfolio

100.0

The number of companies in the portfolio is 78 (2023: 78).

* Sector categories correspond to those used in the Russell 2000 Index.

Job No: 52458 Proof Event: 31 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

Brown Advisory US Smaller Companies plc

32 Annual Report and Financial Statements 2024

Strategic Report

The Directors present their

Strategic Report for the

Company for the financial year

ended 30 June 2024.

The Strategic Report seeks to

provide shareholders with the

relevant information to enable

them to assess the performance

of the Board during the period

under review.

The Strategic Report contains

a summary of the Company’s

business model, a statement of

its objectives and investment

policy, a review of performance

and position and a description

of the principal and emerging

risks it faces. Please refer to the

Chairman’s Statement and the

Portfolio Manager’s Report for

an analysis of the Company’s

performance during the financial

year and a summary of its future

prospects. Pages 32 to 63

together with the sections of this

annual report incorporated by

reference, consist of a Strategic

Report that has been prepared

in accordance with section 414A

of the Companies Act 2006 (the

Act).

Business and Status

During the year the Company

carried on business as an

investment trust with its

principal activity being portfolio

investment. The Company has

been approved by HM Revenue

& Customs as an investment

trust subject to the Company

continuing to meet the eligibility

conditions of sections 1158

and 1159 of the Corporation

Tax Act 2010 (CTA 2010) and

the ongoing requirements for

approved companies as detailed

in Chapter 3 of Part 2 of the

Investment Trust (Approved

Company) (Tax) Regulations

2011. In the opinion of the

Directors, the Company has

conducted its affairs in the

appropriate manner to retain its

status as an investment trust.

The Company is an investment

company within the meaning of

section 833 of the Companies

Act 2006.

The Company is not a close

company within the meaning of

the provisions of the CTA 2010

and has no employees.

The Company was incorporated

in England & Wales on 15

January 1993.

There has been no significant

change in the activities of the

Company during the year to

30 June 2024 and the Directors

anticipate that the Company

will continue to operate in the

same manner during the current

financial year.

Investment Policy and

Objective

The Company’s investment

policy and objective is set out on

page 4.

Gearing

The Company was not geared

during the year.

A definition of gearing is

included in the glossary of

terms including Alternative

Performance Measures on

page 94.

Key Performance Indicators

At Board meetings, the

Directors consider a number

of performance indicators to

assess the extent to which

the Company is meeting its

objective. The key performance

indicators used to measure the

performance of the Company

over time are as follows:

 Net Asset Value changes;

 The discount or premium

of share price to Net Asset

Value;

 A comparison of the absolute

and relative performance of

the Ordinary share price and

the Net Asset Value per share

relative to the return on the

Company’s Benchmark Index

and of its peers;

 Ordinary share price

movement; and

 The Company’s ongoing

charges ratio.

A history of the Net Asset

Value, Ordinary share price and

Benchmark Index are shown

on the monthly factsheets

which can be viewed on the

Portfolio Manager website

www.brownadvisory.com/basc

Strategic Report Governance Company Information

Job No: 52458 Proof Event: 31 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

for the year ended 30 June 2024 33

Financial Statements

Information on performance

against Key Performance

Indicators can also be found

on page 94 and within the

Chairman’s Statement on

pages 7 to 13.

Discount to Net Asset Value

The Directors regularly review

the level of the discount or

premium between the closing

price of the Company’s Ordinary

shares and the Net Asset Value.

The Company will issue shares

when there is sufficient demand.

Such issues are always at a price

which is in excess of the NAV. No

shares were issued during the

year under review.

The Board will apply its revised

policy of buying back shares with

the aim of reducing discount

volatility and maintaining any

discount such that it is not

significantly wider than those

of similar investment trusts. It

believes this to be in shareholders’

interests. In determining whether

to buy back shares, the Board

will consider, amongst other

factors, and at its discretion, the

size of the Company, general

market conditions and sentiment,

the liquidity in the shares and

discounts in the investment trust

sector overall.

The Directors had powers

granted to them at the last

Annual General Meeting (AGM)

held on 6 November 2023 to

purchase Ordinary shares and

either cancel or hold them

in Treasury as a method of

controlling the discount to Net

Asset Value and enhancing

shareholder value. 90,000

shares were repurchased during

the period to 30 June 2024 for

holding in Treasury.

Under the FCA Listing Rules,

the maximum price that may

be paid by the Company

on the repurchase of any

Ordinary shares is 105% of the

average of the middle market

quotations for the Ordinary

shares for the five business days

immediately preceding the date

of repurchase. The minimum

price will be the nominal value of

the Ordinary shares. The Board

is proposing that its authority to

repurchase up to approximately

14.99% of its issued share

capital (excluding Treasury

Shares) be renewed at the AGM.

The new authority to repurchase

will last until the conclusion of

the AGM of the Company in

2025 (unless renewed earlier).

Any repurchase made will be

at the discretion of the Board

in light of prevailing market

conditions and within guidelines

set from time to time by the

Board, the Companies Act,

the FCA Listing Rules and the

Market Abuse Regulation.

Treasury Shares

In accordance with the

Companies (Acquisition

of Own Shares) (Treasury

Shares) Regulations 2003

(the Regulations), which came

into force on 1 December

2003, any Ordinary shares

repurchased, pursuant to the

above authority, may be held

in Treasury. These Ordinary

shares may subsequently be

cancelled or sold for cash. This

gives the Company the ability

to reissue shares quickly and

cost effectively and provides

the Company with additional

flexibility in the management of

its capital.

At 30 June 2024 there were

6,361,254 Ordinary shares held

in Treasury (2023: 6,271,254).

Management

The Company has no employees

and most of its day-to-day

responsibilities are delegated

to Brown Advisory LLC, which

acts as the Company’s Portfolio

Manager, and FundRock

Partners Limited which acts

as the Company’s Alternative

Investment Fund Manager

(AIFM) and Company Secretary.

J.P. Morgan Europe Limited

(JPMEL) acts as the Company’s

Depositary. The Company has

also entered into an outsourcing

arrangement with J.P. Morgan

Chase Bank N.A. (JPMCB) as

custodian and for the provision

of accounting services.

Further details of the

Company’s arrangement with

Brown Advisory LLC and the

AIFM can be found in Note 15

to the Financial Statements

on page 92.

Job No: 52458 Proof Event: 31 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

Brown Advisory US Smaller Companies plc

34 Annual Report and Financial Statements 2024

Viability Statement

In accordance with Provision

36 of the Code of Corporate

Governance as issued by the

Association of Investment

Companies in February 2019

(the ‘AIC Code’), the Board has

assessed the prospects of the

Company over a longer period

than the twelve months required

by the ‘Going Concern’ provision,

by reviewing the next three years.

The Board has considered the

Company’s business model,

including its investment objective

and investment policy, the

principal and emerging risks and

uncertainties that may affect

the Company, as detailed on

pages 35 to 37, the size threshold

below which the Company would

be considered uneconomic or

unviable, and the Company’s

performance and attractiveness

to investors in the current

environment. The Board has

noted that:

 the Company holds a

liquid portfolio invested

predominantly in US listed

equities;

 the Company is not geared;

 the Company has maintained

a reasonable performance

and share price discount to

NAV;

 the portfolio management

fee is the most significant

expense of the Company. It

is charged as a percentage of

the Company’s net asset value

and so would reduce if the

market value of the portfolio

were to fall. The remaining

expenses are modest in value

and predictable in nature;

 no significant increase

to ongoing charges or

operational expenses is

anticipated; and

 it is satisfied that Brown

Advisory LLC and the

Company’s other key third-

party suppliers maintain

suitable processes and

controls to ensure that they

can continue to provide their

services to the Company.

The Board recognises that a

continuation vote is scheduled for

2026 but has no current reason

to believe that shareholders will

vote against the continuation of

the Company.

The Board has also considered

the market outlook, both for US

smaller company equities and

for investment trusts, and has

concluded that these remain

an attractive opportunity for

investors.

The Board has therefore

concluded that there is a

reasonable expectation that

the Company will be able to

continue in operation and meet

its liabilities as they fall due over

the next three years.

Principal and Emerging Risks

and Uncertainties

The Board, through the Audit

and Risk Committee, carries

out a regular review of the

risk environment in which the

Company operates, changes to

the environment and individual

risks. The Board also considers

emerging risks which might

affect the Company.

In addition to those principal risks

and uncertainties, the Board

considers that the development

of artificial intelligence (AI)

presents potential risks to

businesses in almost every

sector. The extent of the risk

presented by AI is extremely

hard to assess at this point but

the Board considers that it is

an emerging risk and, together

with the Manager, will monitor

developments in this area.

During the year, the continued

conflict in Ukraine and tensions

between China and the US have

created geopolitical uncertainties

which have increased market risk

and volatility.

There are a number of other

risks which, if realised, could

have a material adverse effect

on the Company and its financial

condition, performance and

prospects. The Board has carried

out a robust assessment of

the Company’s principal and

emerging risks, which include

those that would threaten

its business model, future

performance, solvency, liquidity

or reputation.

The principal risks and

uncertainties facing the

Company at the current time,

together with a description of the

mitigating actions the Board has

taken, are set out in the table on

the next page.

Strategic Report continued

Strategic Report Governance Company Information

Job No: 52458 Proof Event: 31 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

for the year ended 30 June 2024 35

Financial Statements

Risk Mitigating Action

Investment objective: the

Company’s objective becomes

unattractive to investors which

could result in a lack of demand for

the Company’s shares.

Board review: the Board formally reviews the Company’s

objective and related strategies on an annual basis, or more

regularly if appropriate.

Shareholder communication: the Board is cognisant of

the importance of regular communication with shareholders.

The Chairman offers meetings with the Company’s largest

shareholders, and the Board meets with shareholders at the

Annual General Meeting. Additionally a shareholder pres-

entation with questions and answers is available at the AGM.

The Board reviews shareholder correspondence and inves-

tor relations reports and also receives feedback from the

Company’s broker.

Investment strategies: the

Company adopts inappropriate

investment strategies in pursuit

of its objective which could result

in decreased demand for the

Company’s shares, leading to a

widening of the discount and poor

investment performance.

Adherence to investment guidelines: the Board sets

investment guidelines and restrictions which the Portfolio

Manager follows, covering matters such as asset allocation,

diversification, gearing and currency exposure. These

guidelines are reviewed regularly and reports on compliance

with them are reviewed at Board meetings.

In order to ensure adequate diversification, the Board has

set absolute limits on minimum holdings and maximum

exposures in the portfolio at the time of investment, which

are set out on page 4.

Share price trading at a

discount to NAV: A protracted

discount to NAV could reduce the

attractiveness of the Company’s

shares.

Discount monitoring: the Board, through the Portfolio

Manager and AIFM, keeps the level of discount under con-

stant review. The Board is responsible for the Company’s

share buyback policy and is prepared to authorise the use of

share buybacks to provide liquidity to the market and to try

to limit any widening of the discount, to the extent that it is

wider than those of similar investment trusts.

Investment performance:

the appointment or continuing

appointment of a portfolio

manager with inadequate

resources, skills or expertise, or

which makes poor investment

decisions. This could result in poor

investment performance, a loss

of value for shareholders and a

widening discount.

Monitoring of performance: the Board keeps

performance under continual review. It meets the Portfolio

Manager on a regular basis and keeps under close review

(inter alia) its resources and adherence to investment

guidelines. The Board discusses with the Portfolio Manager

reasons for over or under-performance at every Board

meeting.

A detailed formal appraisal of the Portfolio Manager is

carried out annually by the Board. The Board also keeps

under review the adequacy of risk controls.

Job No: 52458 Proof Event: 31 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

Brown Advisory US Smaller Companies plc

36 Annual Report and Financial Statements 2024

Risk Mitigating Action

Financial/market: insufficient

oversight or controls over financial

risks, including foreign currency

risk, market price risk, interest

rate risk, liquidity risk, credit and

counterparty risk, and insufficient

revenue forecasting and

monitoring, could result in losses

to the Company.

Management controls: the Portfolio Manager has a range

of procedures and controls relating to the Company’s

financial instruments and maintains a closed ‘approved

broker’ list.

Board review: as stated above, the Board sets investment

guidelines and restrictions which are reviewed regularly and

the Portfolio Manager reports on compliance with them at

Board meetings.

Revenue forecasting and monitoring: the AIFM presents

detailed forecasts of income and expenditure covering

both the current and subsequent financial years at Board

meetings.

Further details of the Company’s financial instruments and

associated risk management are included in Note 12 to the

Financial Statements.

Regulatory: changes to, or

failure to comply with, relevant

regulations (including the

Companies Act, the Financial

Services and Markets Act, the

Alternative Investment Fund

Managers Directive, accounting

standards, investment trust

regulations, the FCA Listing

Rules, Disclosure Guidance

and Transparency Rules and

Prospectus Rules) could result in

fines, loss of reputation, reduced

demand for the Company’s shares

and potentially the loss of an

advantageous tax regime.

Board awareness: the Directors have an awareness of

the more important regulations and are provided with

information on changes by the Association of Investment

Companies. In terms of day to day compliance with

regulations, the Board is reliant on the knowledge and

expertise of the AIFM and Company Secretary. However,

where necessary, the Board engages the services of external

advisers.

Management controls: the Company Secretary and

accounting teams use checklists to aid compliance and

these are supported by the AIFM’s compliance monitoring

programme and risk-based internal audit investigations.

Strategic Report continued

Strategic Report Governance Company Information

Job No: 52458 Proof Event: 31 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

for the year ended 30 June 2024 37

Financial Statements

Risk Mitigating Action

Operational (including

cybercrime) the Company is

reliant on services provided by

third parties (in particular those

of the Portfolio Manager, AIFM,

custodian and depositary) and

any control gaps and failures in

their operations could expose the

Company to loss or damage.

Agreements: written agreements are in place defining the

roles and responsibilities of all third-party service providers.

Internal control systems of the AIFM and Portfolio

Manager: the Board receives reports on the operation and

efficacy of IT and control systems, including those relating to

cyber-crime and internal audit and compliance functions.

Safekeeping of assets: the Depositary is ultimately

responsible for the safekeeping of the Company’s assets and

holds cash and securities in segregated accounts with J.P.

Morgan Chase Bank N.A. The Depositary reconciles these

accounts daily against the records of the Portfolio Manager.

Monitoring of other third-party service providers: the

AIFM closely monitors the control environments and quality

of services provided by third parties, including those of the

depositary. This includes controls relating to cyber-crime

and is conducted through service level agreements, regular

meetings and key performance indicators. The Directors

review reports on the AIFM’s monitoring of third-party

service providers on a periodic basis.

There are coded limits within the Portfolio Manager’s dealing

systems.

A detailed formal appraisal of the AIFM, Portfolio Manager

and other key third party providers is carried out annually by

the Board.

Geopolitical (including a

pandemic, climate change and

the conflict in Ukraine): the

impact of geopolitical events could

result in losses to the Company.

Board and Portfolio Manager awareness: geopolitical

events over which the Company has no control are always a

risk. The Board and Portfolio Manager regularly horizon scan

and consider what they can do to address these risks.

Job No: 52458 Proof Event: 31 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

Brown Advisory US Smaller Companies plc

38 Annual Report and Financial Statements 2024

Employees, Environmental,

Social and Human Rights

Issues

The Company has no

employees and therefore no

disclosures need to be made

in respect of employees. The

Board has delegated the

day-to-day management and

administration functions to the

Portfolio Manager, the AIFM,

JPMEL, JPMCB and other third-

party service providers.

Modern Slavery Act

The Modern Slavery Act 2015

requires certain companies to

prepare a slavery and human

trafficking statement. As the

Company has no employees

and does not supply goods

and services, no statement is

required.

Global Greenhouse Gas

Emissions

The Company has no

greenhouse gas emissions to

report from its operations as

its day-to-day management

and administration functions

have been outsourced to third

parties and it neither owns

physical assets or property

nor has employees of its own.

It therefore does not have

responsibility for any emissions-

producing sources under the

Companies Act 2006 (Strategic

Report on Directors’ Reports)

Regulations 2013.

Under FCA Listing Rule 15.4.29

(R) the Company, as a closed

ended investment company, is

exempt from complying with the

Task Force on climate-related

Financial Disclosures.

Section 172 Statement

Under Section 172 (S172) of

the Companies Act 2006, the

Directors have a duty to act in

good faith and to promote the

success of the Company for

the benefit of its shareholders

as a whole. This includes taking

into consideration the likely

consequences of their decisions

in the long-term and in respect

of the Company’s stakeholders

such as its shareholders,

employees, if any, and suppliers,

while acting fairly as between

shareholders.

The Directors must also

consider the impact of the

Company’s decisions on the

environment, the community

and its reputation for

maintaining high standards of

business conduct.

The Company ensures that the

Directors are able to discharge

this duty by providing them

with relevant information and

training on their duties. The

Company also ensures that

information pertaining to its

stakeholders is provided, as

required, to the Directors as part

of the information presented in

regular Board meetings in order

that stakeholder considerations

can be factored into the Board’s

decision-making. The Directors’

responsibilities are also set

out in the schedule of matters

reserved for the Board and the

terms of reference of its Audit

and Risk Committee, both of

which are reviewed regularly

by the Board. At all times the

Directors can access, either

collectively or individually,

advice from its professional

advisers including the Company

Secretary and independent

external advisers.

The Company’s investment

objective, to achieve long-term

capital growth by investing in a

diversified portfolio primarily of

quoted US smaller and medium-

sized companies, supports the

Directors’ statutory obligations

to consider the long-term

consequences of the Company’s

decisions.

The Company is aware of its

own potential impact on the

environment and has practical

policies in place to reduce that

impact. Examples include the

use and sharing of electronic

Board materials and the

provision of electronic copies of

the annual report and financial

statements to shareholders

and via the Company’s website.

Where physical copies of the

annual and half yearly financial

reports are made, materials and

processes are used which are

designed to both minimise the

environmental impact and to

maximise the recycling potential

as described in more detail on

Strategic Report continued

Strategic Report Governance Company Information

Job No: 52458 Proof Event: 31 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

for the year ended 30 June 2024 39

Financial Statements

submitted either directly or by

publishing our response on the

Company website. All views of

the shareholders will be taken

into consideration and action

taken where appropriate.

Online Information – The

Company’s website contains the

annual and half yearly financial

report along with monthly

factsheets and commentaries

from the Portfolio Manager. The

daily NAV per share, monthly top

ten portfolio listings and other

regulatory announcements can

be found on the regulatory news

service of the London Stock

Exchange.

Shareholder

Communications

Shareholders can raise issues or

concerns at any time by writing

to the Chairman or the Senior

Independent Director at the

Registered Office.

Further details about how

the Board incorporates the

views of the Company’s

shareholders can be found

in the UK Stewardship Code

and the Exercise of Voting

Powers section on page 48.

Further information about

how the Board ensures that

each Director develops an

understanding of the views of

the Company’s shareholders

can be found in the section

entitled Shareholder Relations

on page 49 of this report.

the inside back cover of this

document.

Engagement With Suppliers,

Customers And Others And

The Effect On Principal

Decisions

The Shareholders – The

shareholders of the Company

are both institutional and

retail and details of those with

substantial shareholdings are

provided on page 45.

The Board believes that

shareholders have a vital role

in encouraging a higher level

of corporate performance and

is committed to listening to

the views of its shareholders

and giving useful and timely

information. The Board provides

open and accessible channels of

communication including those

listed below.

The AGM – The Company

encourages participation from

shareholders at its AGMs, where

they can communicate directly

with the Directors and Portfolio

Manager. The upcoming AGM

will include a short presentation

by the Portfolio Manager on the

performance of the Company

over the past year, as well as

an outlook for the future. The

Board and Portfolio Manager

welcome questions which

shareholders may submit to

InvestmentTrustEnquiries@

brownadvisory.com Subject

to confidentiality, the Board

will respond to any questions

The AIFM and the Portfolio

Manager

Brown Advisory LLC acts as the

Company’s Portfolio Manager

and FundRock Partners Limited

has been appointed as the

Company’s AIFM.

The portfolio management

function is critical to the long-

term success of the Company.

The Board and the Portfolio

Manager maintain an open

and constructive relationship,

with meetings taking place a

minimum of four times per

annum, with monthly updates

and additional meetings as

required.

The ‘Management’ section on

page 33 in this report details

the Board’s consideration

of the Portfolio Manager’s

performance, its terms of

appointment and the Board’s

annual assessment of the

Portfolio Manager’s continued

stewardship of the portfolio

and its oversight of the

administrative functions.

The Audit and Risk Committee

meets at least twice a year and

as part of its role considers the

reports on the internal control

objectives and procedures

of the Portfolio Manager, the

AIFM, and other third party

service providers together with

independent, external reviews

where appropriate.

Job No: 52458 Proof Event: 31 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

Brown Advisory US Smaller Companies plc

40 Annual Report and Financial Statements 2024

The AIFM also supplies

company secretarial services

to the Company. The AIFM

oversees the activities of the

Company’s other third-party

suppliers on behalf of the

Company and maintains open

and collaborative relationships

to maintain quality, efficiency

and cost control through

regular communication with

operational teams. The Board

regularly reviews reports

from the Portfolio Manager,

the AIFM and Company

Secretary, the Depositary, the

Company’s broker, the investor

relations research provider

and its independent Auditor.

These provide vital information

concerning changes in market

practice or regulation which

affect the Company and assist

the Board in its decision-making

process. Representatives from

these providers attend Company

Board meetings and give

presentations on a regular basis

enabling in depth discussions

concerning their findings and

performance.

Other Third-Party Service

Providers

As an externally managed

investment company with no

employees or physical assets,

the principal stakeholders

of the Company are its

shareholders, Portfolio Manager,

AIFM, Depositary, custodian,

administrator and registrar.

The continuance, or otherwise,

of engagement of key third-party

service providers are principal

decisions taken by the Board

every year.

In Summary

The governance structure and

decision-making process are

underpinned by the duties of

the Directors under S172 on

all matters. The Board firmly

believes that the sustainable

long-term success of the

Company is dependent upon

taking account of the interests of

all its key stakeholders.

For and on behalf of the Board

Stephen White

Chairman

20 September 2024

Strategic Report continued

Job No: 52458 Proof Event: 30 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

for the year ended 30 June 2024 41

Strategic Report Governance Company InformationFinancial Statements

Governance report

for the year ended 30 June 2024 41

Strategic Report

Governance Company InformationFinancial Statements

Job No: 52458 Proof Event: 30 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

Brown Advisory US Smaller Companies plc

42 Annual Report and Financial Statements 2024

Directors

† † Member of the Audit and Risk Committee. † † Member of the Audit and Risk Committee.

Stephen White

†

Chairman of the Board

Appointed to the Board in

October 2020 and subsequently

appointed as Chairman of

the Board in October 2021.

Mr White is a non-executive

director and chairman of the

audit committee of BlackRock

Frontiers Investment Trust plc

and a non-executive director of

Polar Capital Technology Trust

plc. He qualified as a Chartered

Accountant at PwC before

starting a career in investment

management. He has more

than 35 years’ investment

experience, most notably as

head of European equities

at F&C Asset Management,

where he was manager of

F&C Eurotrust plc and deputy

manager of the F&C Investment

Trust plc, and as head of

European and US equities at

British Steel Pension Fund.

Ruth Beechey

†

Appointed to the Board in July

2024, Ms Beechey has extensive

experience as a lawyer in the

fund management industry,

including as Associate Counsel

at Deutsche Asset Management,

Head of Legal at UBS Asset

Management UK, and Chief of

Staff at UBS Asset Management

UK. Ms Beechey is also a non-

executive director at Legal and

General Assurance (Pensions

Management Ltd) and at

Investor Forum.

Job No: 52458 Proof Event: 30 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

for the year ended 30 June 2024 43

Strategic Report Governance Company InformationFinancial Statements

† † Member of the Audit and Risk Committee.

Lisa Booth

†

Jane Routledge

†

Senior Independent Director

Jasper Judd

†

Chairman of the Audit and Risk

Committee

Appointed to the Board in

September 2015. Ms Booth

is a solicitor with many years’

experience in private practice.

She co-founded a law firm in

the City of London in 2003

and developed and managed

a practice focusing on private

equity and investment fund

transactions during the

subsequent ten years. She

currently works as the General

Counsel of a Berlin-based

company which provides online

travel search and ticket booking

services.

Appointed to the Board in

October 2022. Mr Judd is a

chartered accountant and

non-executive director and

chairman of the audit committee

of Dunedin Income Growth

Investment Trust plc and a non-

executive director and chairman

of the audit and risk committees

of JPMorgan Indian Investment

Trust plc and Schroder Asian

Total Return Investment

Company plc. Previously, he

had a long career in finance and

strategy.

Appointed to the Board in April

2023, Ms Routledge is a non-

executive director of M&G Credit

Income Investment Trust plc

(MGCI) and abrdn Asian Income

Fund Limited. Previously, Ms

Routledge had a long career in

the investment management

sector and has held a number

of senior marketing positions

including at Schroders, Invesco,

Hermes and Seven Investment

Management.

Job No: 52458 Proof Event: 30 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

Brown Advisory US Smaller Companies plc

44 Annual Report and Financial Statements 2024

Report of the Directors

 being available to

shareholders and other

Directors to address any

concerns or issues they feel

have not been adequately

dealt with through the usual

channels of communication

(through the Chairman).

Directors’ Remuneration and

Interests

The Directors’ Remuneration

Report and Policy

on pages 59 to 62

provides information on

the remuneration and

shareholdings of the Directors.

Results and Dividends

The Company’s Net Asset Value

per Ordinary share and the

Ordinary share price increased

by 2.8% and 5.1% respectively

in the year ended 30 June 2024,

compared to an increase of

10.7% in the sterling adjusted

Russell 2000 Total Return Index.

Results and reserve

movements for the year are

set out in the Statement of

Comprehensive Income on

page 76 and the Notes to

the Financial Statements on

pages 81 to 92.

The Net Assets of the

Company at 30 June 2024

were £174.5 million (2023:

£171.1 million). No distributable

revenue is available for payment

of dividends.

Capital Structure

As at 30 June 2024 the

The Directors present the

Annual Report and Financial

Statements of the Company

for the year ended 30 June

2024.

Directors

The Directors of the Company

and their biographies can be

found on pages 42 and 43.

Mr White, Ms Booth, Mr Judd,

Mr Parritt and Ms Routledge

held office throughout the year

under review. Ms Beechey was

appointed to the Board on 1 July

2024. Mr Judd is Chairman of

the Audit and Risk Committee

and Ms Routledge serves as the

SID. Mr Parritt retired from the

Board on 30 June 2024.

The SID serves as a sounding

board for the Chairman and acts

as an intermediary for other

directors and shareholders. The

SID is responsible for:

 leading the annual

assessment of the

performance of the

Chairman;

 holding meetings with the

other Directors without the

Chairman being present,

when required;

 carrying out succession

planning for the Chairman’s

role;

 working with the Chairman,

other Directors and

shareholders to resolve major

issues; and

Company’s issued share

capital consisted of 18,223,413

Ordinary shares of 25p each, of

which 6,361,254 were held in

Treasury. As a result, the voting

shares on 30 June 2024 totalled

11,862,159. All Ordinary shares

rank equally for dividends and

distributions and carry one vote

each. There are no restrictions

concerning the transfer of

securities in the Company, no

special rights with regard to

control attached to securities,

no agreements known to the

Company between holders

of securities regarding their

transfer and no agreement to

which the Company is party that

affects its control following a

takeover bid.

Details of the capital structure

can be found in Note 13 to

the Financial Statements on

page 91.

Upon a winding-up, after

meeting the liabilities of the

Company, the surplus assets

would be distributed to

shareholders pro rata to their

holdings of Ordinary shares.

Notifiable Interests in the

Company’s Voting Rights

In accordance with the

Disclosure and Transparency

Rules as issued by the Financial

Conduct Authority (FCA), the

Company is required to be

notified of any new or changes to

previously disclosed substantial

interests in its Ordinary shares.

Job No: 52458 Proof Event: 30 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

for the year ended 30 June 2024 45

Strategic Report Governance Company InformationFinancial Statements

Substantial shareholders

At 30 June 2024, the following shareholders had declared a notifiable interest in the Company’s voting

rights:

Shareholder

Ordinary

held

% of total

voting

rights*

Date of

notification

Rathbones Investment Management Limited 728,149 6.09 22 September 2023

Brewin Dolphin Limited 757,661 6.34 29 November 2023

1607 Capital Partners, LLC 594,885 4.98 5 January 2024

Saba Capital Management, L.P. 596,719 5.03 26 April 2024

* Based on number of voting rights as at the date of notification.

Directors’ and Officers’

Liability Insurance and

Indemnification

During the year under review

the Company purchased and

maintained liability insurance

for its Directors and Officers as

permitted by Section 233 of the

Companies Act 2006.

Directors’ Indemnification

The Company has indemnified

its Directors in respect of their

duties as Directors and Officers

of the Company, against certain

civil claims brought by third

parties and associated legal

costs to the extent that they are

permitted by the Companies Act

2006.

AIFMD Disclosures

Brown Advisory LLC is

appointed as the Company’s

Portfolio Manager and FundRock

Partners Limited is appointed as

the Company’s AIFM.

A summary of the terms of

the appointment including the

notice of termination period

and annual fee is set out in Note

15 to the Financial Statements

on page 92.

Since the year end no changes

to these interests have been

notified to the Company.

Repurchase of Shares

Authority to Repurchase Shares

At the AGM held on 6 November

2023 shareholders renewed

the authority to buy back the

Company’s Ordinary shares

for cancellation or holding in

Treasury. The Board is seeking

to renew the Company’s

buyback powers at the

forthcoming AGM. It is believed

that these provisions provide a

valuable tool in the management

of the Company’s share value

against Net Asset Value. The

current authority allows the

Company to purchase up to

14.99 per cent of the issued

Ordinary shares (excluding

Treasury shares).

Purchases would be made at

the discretion of the Board and

within guidelines as set from

time to time. Under the FCA

Listing Rules and the buyback

and stabilisation regulation,

the maximum price for such

buybacks cannot exceed the

higher of (i) 105 per cent of the

average middle market price

for the five days immediately

preceding the date of

repurchase; and (ii) the higher of

the price of the last independent

trade and the highest current

independent bid.

Conflicts of Interest

Each Director has a statutory

duty to avoid a situation where

they have or may have a direct

or indirect interest which

conflicts or might conflict with

the interests of the Company,

unless the relevant conflict

or potential conflict has been

authorised by the Board in

accordance with the Company’s

Articles of Association. The

Directors have declared all

potential conflicts of interest

with the Company. The register

of potential conflicts of interests

is kept at the registered office

of the Company. It is reviewed

regularly by the Board and all

Directors advise the Company

Secretary as soon as they

become aware of any potential

conflicts of interest. Directors

who have potential conflicts of

interest do not participate in any

discussions which relate to any

of their potential conflicts.

Job No: 52458 Proof Event: 30 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

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Brown Advisory US Smaller Companies plc

46 Annual Report and Financial Statements 2024

Report of the Directors continued

The Directors believe that it

is in the best interests of all

shareholders for the Company

to continue the appointment

of the AIFM and the Portfolio

Manager on the existing terms

of appointment having reviewed

the services provided by the

AIFM and the Portfolio Manager

during the year.

Remuneration of the AIFM

Under the Alternative

Investment Fund Managers

Directive (AIFMD), FundRock

Partners Limited acting as the

AIFM of the Company is required

to disclose the aggregate

amount of remuneration broken

down by senior management

and members of staff of the

AIFM whose actions have a

material impact on the risk

profile of the Company.

FundRock Partners Limited

has established an AIFM

remuneration policy designed

to ensure that the AIFM

Remuneration Code in the UK

Financial Authority Handbook

is met proportionately for all

AIFM Remuneration Code staff.

Further details of the FundRock

Partners Limited remuneration

policy can be found at https://

www.fundrock.com/policies-

and-compliance/remuneration-

policy-uk/

In its role as an AIFM, FundRock

Partners Limited deems itself

as lower risk due to the nature

of the activities it conducts.

Therefore, FundRock Partners

Limited has provided a basic

overview of how staff whose

actions have a material

impact on the Company are

remunerated.

Due to the size and structure of

FundRock Partners Limited, it

is determined that employees

of the AIFM who have a material

impact on the risk profile of the

Company include the Board and

Head of Compliance.

The Portfolio Manager is subject

to regulatory requirements on

remuneration that FundRock

Partners Limited deem to be

equally as effective as those

detailed in the AIFMD, which

would include the Capital

Requirements Directive or

Markets in Financial Instruments

Directive.

Number of

beneficiaries

Total

remuneration

paid

Fixed

remuneration

(everything

else that is not

discretionary)

Variable

remuneration

paid

(discretionary)

Carried

interest

paid by the

Company

Total remuneration paid by

FundRock Partners Limited

during the financial year 22 2,158,843 2,043,732 115,111 0

Remuneration paid to

employees of the AIFM

who have a material impact

on the risk profile of the

Company 5 724,313 67 7,086 47, 227 0

¹ Number of beneficiaries represents employees of the AIFM who are fully or partially involved in the activities of the Company as at 30 June 2024.

² Total remuneration paid represents total compensation of those employees of the AIFM who are fully or partially involved in the activities of the Company,

based on their time in the role during the reporting period. Due to the AIFM’s operational structure, the information needed to provide a further breakdown of

remuneration attributable to the Company is not readily available and would not be relevant or reliable.

Job No: 52458 Proof Event: 30 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

for the year ended 30 June 2024 47

Strategic Report Governance Company InformationFinancial Statements

For the purposes of the

Alternative Investment Fund

Managers Directive (the AIFMD),

leverage is any method which

increases the Company’s

exposure, including the

borrowing of cash and the use

of derivatives. It is expressed as

a ratio between the Company’s

exposure and its net asset value

and is calculated on a gross

and a commitment method,

in accordance with the AIFMD

regulations. Under the gross

method, exposure represents

the sum of the Company’s

positions without taking into

account any hedging and netting

arrangements. Under the

commitment method, exposure

is calculated after certain

hedging and netting positions

are offset against each other.

Going Concern

The Financial Statements

have been prepared on a

going concern basis. The

Directors consider that this

is the appropriate basis

as they have a reasonable

expectation that the Company

has adequate resources

to continue in operational

existence for the foreseeable

future. In considering this, the

Directors took into account

the Company’s investment

objective, risk management

policies and capital

management policies, the

diversified portfolio of readily

realisable securities which can

be used to meet short-term

funding commitments and the

ability of the Company to meet

all of its liabilities and ongoing

expenses.

In determining the

appropriateness of the going

concern basis, the Directors

gave particular focus to the

operational resilience and

ongoing viability of the Portfolio

Manager, the AIFM and other

key third-party suppliers.

Bribery Prevention Policy

The provision of bribes of any

nature to third parties in order

to gain a commercial advantage

is prohibited and is a criminal

offence. The Board takes very

seriously its responsibility

to prevent, through Brown

Advisory LLC and the AIFM on

its behalf, any bribery. To aid the

prevention of bribery, Brown

Advisory LLC and the AIFM have

adopted a Bribery Prevention

Policy.

Risk Management and

Internal Controls

In accordance with the AIC

Code, the Board is responsible

for monitoring the Company’s

risk management and internal

control systems and reviewing

their effectiveness, at least

annually, and to report on

its review in the Company’s

Annual Report. Internal control

systems are designed to meet

the particular requirements of

the Company and to manage

rather than eliminate the risks of

failure to achieve its objectives.

The systems by their very

nature can provide reasonable

but not absolute assurance

against material misstatement

or loss. The Board, through the

Audit and Risk Committee, has

reviewed the effectiveness of

the Company’s internal control

systems including the financial,

operational and compliance

controls and risk management.

These systems have been in

place for the period under review

and to the date of signing the

financial statements.

The Company receives

services from the Portfolio

Manager and the AIFM relating

to the management of the

Company, and from JPMEL for

Leverage

The Company is required to state its maximum and actual leverage levels, calculated as prescribed by the

AIFMD, as at 30 June 2024, which gives the following figures:

Maximum

limit

Gross

exposure

average

leverage

employed

during the

year

Commitment

exposure

average

leverage

employed

during the

year

30 June 2022 2.10 1.01 1.01

30 June 2023 2.10 1.03 1.03

Job No: 52458 Proof Event: 30 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

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Brown Advisory US Smaller Companies plc

48 Annual Report and Financial Statements 2024

Report of the Directors continued

depositary services and JPMCB

for custodian services and

accounting services in respect

of the Company. Documented

contractual arrangements

are in place with these service

providers which define the

areas where the Company has

delegated authority to them.

The Audit and Risk Committee

has considered the reports on

the internal control objectives

and procedures of the Portfolio

Manager, the AIFM, JPMEL

and JPMCB, together with the

opinion of the service auditors

for these reports, which detail

the measures and the testing of

the measures which are in place

to ensure the proper recording,

valuation, physical security and

protection from theft of the

Company’s investments and

assets and the controls which

have been established to ensure

compliance with all regulatory,

statutory and fiscal obligations

of the Company.

The Directors have also had

regard to the procedures for

safeguarding the integrity of the

computer systems operated

by the Portfolio Manager, the

AIFM, JPMEL and JPMCB and

the key business continuity

plans. The Board reviews the

procedures described above for

the management of risk on an

annual basis.

UK Stewardship Code and

the Exercise of Voting Powers

The Portfolio Manager is

responsible for voting the shares

it holds on the Company’s

behalf. The Portfolio Manager’s

Proxy Voting Policy can be found

at https://www.brownadvisory.

com/us/sustainable-investing

The Board and the Portfolio

Manager believe that

shareholders have an important

role in encouraging a higher

level of corporate performance

and therefore adopt a positive

approach to corporate

governance. The Portfolio

Manager aims to act in the best

interests of all its stakeholders

by engaging with companies

in which the Company invests,

and by exercising its voting

rights with care. Not only is

this commensurate with good

market practice, but it also goes

hand in hand with ensuring the

responsible investment of its

clients’ funds. Equally, research

is undertaken to determine their

plans for maintaining social and

environmental sustainability

within their business.

In order to assist in the

assessment of corporate

governance and sustainability

issues and contribute to a

balanced view, the Portfolio

Manager subscribes to external

corporate governance and

sustainability research providers

but does not necessarily follow

their voting recommendations.

Contentious issues are

identified and, where necessary

(and where timescales

permit), are discussed with

corporate governance and/

or sustainability analysts

and portfolio managers, and

companies. The Portfolio

Manager ensures that

resolutions are voted in

accordance with this practice

and timely voting decisions are

made.

From time to time, resolutions

will be brought to annual general

meetings of investee companies

by third parties encouraging

companies to address specific

environmental and/or social

concerns. In such instances the

Portfolio Manager’s corporate

governance and sustainability

analysts will discuss their views

with the investment team and

the Company if appropriate.

The Portfolio Manager will then

vote for what it considers to be

in the best financial interests of

shareholders of the Company,

whilst having regard for any

specific sustainability concerns

unless otherwise directed.

Common Reporting

Standards

The Regulations for Automatic

Exchange of Financial Account

Information (the Common

Reporting Standard, CRS)

issued by OECD have been

enacted in the UK through The

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International Tax Compliance

Regulations 2015.

These Regulations require all

financial institutions (including

investment trust companies)

to share with HMRC certain

information about overseas

shareholders under the UK

FATCA regulations.

Accordingly, the Company is

required to provide information

to HMRC on the tax residencies

of a number of non-UK based

certificated shareholders

and corporate entities on an

annual basis. HMRC in turn

exchanges this information with

tax authorities in the country in

which the shareholder may be

resident for taxation purposes.

HMRC has advised that the

Company will not be required

to provide such information

on uncertified holdings held

through CREST. The Company

has engaged Computershare

to provide such information on

certificated holdings to HMRC

on an ongoing basis.

Shareholder Relations

All shareholders have the

opportunity to attend and

vote at the AGM, during which

the Directors and Portfolio

Manager will be available to

answer questions regarding the

Company. The Notice of Meeting

sets out the business of the AGM

and any item not of an entirely

routine nature is explained in the

Report of the Directors or notes

accompanying the Notice.

Separate resolutions are

proposed for each substantive

issue. Information about

proxy votes is available to

shareholders attending the AGM

and published thereafter on the

Company website.

The Company reports to

shareholders twice a year by

way of the half yearly financial

report and Annual Report

and Financial Statements. In

addition, Net Asset Values

are published on a daily basis

and monthly factsheets are

published on the Company

website www.brownadvisory.

com/basc

The Board has developed the

following procedure for ensuring

that each Director develops an

understanding of the views of

shareholders. Regular contact

with major shareholders is

undertaken by the Company’s

corporate brokers and the

investor relations team of the

Portfolio Manager. Any issues

raised by major shareholders are

then reported to the Board. The

Board also receives details of all

material correspondence with

shareholders and the Chairman

and individual Directors are

willing to meet shareholders to

discuss any particular items

of concern regarding the

performance of the Company.

The Chairman, Directors and

representatives of the Portfolio

Manager are also available to

answer any questions which

may be raised by shareholders.

Engagement with

Stakeholders

More information about

how the Board fosters

the relationships with its

shareholders and other

stakeholders, and how the

Board considers the impact

that any material decision will

have on relevant stakeholders,

can be found in the Section

172 statement in the Strategic

Report on pages 38 and 39.

Statement in Respect of the

Annual Report and Financial

Statements

Having taken all available

information into consideration,

the Board has concluded that

the Annual Report and Financial

Statements for the year ended

30 June 2024, 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.

The Board’s conclusions in

this respect are set out in

the Statement of Directors’

Responsibilities on page 63.

There were no instances where

the Company was required to

make disclosures in respect of

FCA Listing Rule 9.8.4 during the

financial period under review.

The Directors are not aware of

any relevant audit information

of which the Company’s Auditor

is unaware. The Directors also

confirm that they have taken all

the steps required of a director

to make themselves aware of

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50 Annual Report and Financial Statements 2024

any relevant audit information

and to establish that the

Company’s Auditor is aware of

that information.

Significant Votes Against At

The 2023 Annual General

Meeting

There were no votes against

representing 20% or more

of votes cast on any of the

resolutions put forward for

shareholder approval at the

2023 Annual General Meeting.

Annual General Meeting

This year’s AGM will be held

on Monday, 4 November 2024

at 2:00 p.m. at the offices

of Brown Advisory LLC, 18

Hanover Square, London

W1S 1JY.

Please refer to the Notes for

the AGM on pages 98 to

100 for full details on how to

vote and to the Chairman’s

Statement on page 12

for guidance on how to

communicate any questions

that you would like to be

raised at the meeting.

In addition to the ordinary

business to be conducted

at the meeting, the following

resolutions in respect of special

business will be proposed.

Resolution 9: Authority to allot

shares (ordinary resolution)

Resolution 9 seeks authority

for the Directors to allot

Ordinary shares up to an

aggregate nominal amount of

approximately £296,553. This

authority represents 10% of the

Company’s issued share capital

(excluding Treasury shares) as

at the date of this document.

This authority will expire at the

conclusion of the Company’s

upcoming AGM in 2024 (unless

renewed earlier) and it is the

intention of the Directors to seek

renewal of this authority at that

AGM. The Board will only use

this authority where it believes

that it is in the best interests of

the Company to issue shares for

cash.

Resolution 10: Disapplication

of Pre‑emption rights (special

resolution)

The Directors may only allot

Ordinary shares for cash

(other than by way of an offer

to all existing shareholders pro

rata to their shareholdings) if

they are authorised to do so

by shareholders at a general

meeting. The Companies Act

2006 requires that, unless

shareholders have given specific

authority for the waiver of their

statutory pre-emption rights, the

new Ordinary shares must be

offered first to existing Ordinary

shareholders in proportion to

their existing shareholdings.

In certain circumstances, it

may be in the best interests

of the Company to allot new

Ordinary shares (or to grant

rights over shares) for cash

without first offering them to

existing Ordinary shareholders

in proportion to their holdings.

Accordingly, the Directors are

seeking authority to issue up

to 10% of the issued Ordinary

shares on this basis.

The authority will expire at the

conclusion of the upcoming

AGM of the Company in 2024

(unless renewed earlier) and it

is the intention of the Directors

to seek renewal of this authority

at that AGM. Any allotment of

new Ordinary shares pursuant

to the authority conferred by

this Resolution will dilute the

voting power of shareholdings of

existing shareholders, but will not

have a dilutive impact on NAV.

Resolution 11: Authority to buy

back shares (special resolution)

The Company is seeking

shareholder approval to

repurchase up to 14.99% of

the shares in issue (excluding

Treasury shares) at a price that

is not less than the nominal

value of each share. The

authority being sought will last

until the date of the next AGM.

The decision as to whether or

not to repurchase any shares will

be at the discretion of the Board

and any shares repurchased

under the authoritywill be

cancelled or held in Treasury.

The Company will only fund

any purchases by utilising

existing cash resources or out of

distributable profits as defined

by the Companies Act 2006.

Report of the Directors continued

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Any purchase of shares by

the Company will be made in

accordance with the Articles

of Association and the FCA

Listing Rules in force at the time.

No purchase of shares will be

made at a price in excess of the

estimated NAV.

Resolution 12: Notice of General

Meetings (special resolution)

Resolution 12 is required to

reflect the Shareholders’ Rights

Directive (the ‘Directive’).

The Directive has increased

the notice period for General

Meetings of the Company to 21

days. If Resolution 12 is passed

the Company will be able to call

all General Meetings (other than

Annual General Meetings) on

14 clear days’ notice. In order to

be able to do so shareholders

must have approved the calling

of meetings on 14 clear days’

notice. The approval will be

effective until the Company’s

next AGM, when it is intended

that a similar resolution will

be proposed. The Company

will also need to meet the

requirements for electronic

voting under the Directive before

it can call a General Meeting

on 14 clear days’ notice. This

shorter notice period will only

be used where, in the opinion of

the Directors, it is merited by the

purpose of the meeting.

Recommendation

The Board considers that the

passing of the resolutions

being put to the Company’s

AGM would be in the best

interests of the Company and

its shareholders as a whole. It

therefore recommends that

shareholders vote in favour of

Resolutions 1 to 12, as set out

in the Notice of Annual General

Meeting.

By order of the Board

FundRock Partners Limited

Company Secretary

20 September 2024

The Board, left to right: Ruth Beechey, Jasper Judd, Stephen White, Lisa Booth and Jane Routledge.

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52 Annual Report and Financial Statements 2024

Corporate Governance

Compliance Statement

This statement, together with

the Statement of Directors’

Responsibilities on page 63

and the statement of Risk

Management and Internal

Controls on pages 47

and 48, indicates how the

Company has complied with

the recommendations of the

AIC Code as issued in February

2019.

The AIC Code addresses the

Principles and Provisions set out

in the UK Corporate Governance

Code (the UK Code) as issued

in July 2018 by the Financial

Reporting Council (the FRC),

as well as setting out additional

provisions on issues that are

of specific relevance to the

Company.

The Board considers that

reporting against the Principles

and Provisions of the AIC Code,

which has been endorsed by

the FRC, provides more relevant

information to shareholders.

The Company has complied with

the provisions of the AIC Code

(which incorporates the UK

Code), except as set out below.

The UK Code include provisions

relating to:

 The role of the chief executive;

 Executive directors’

remuneration; and

 The need for an internal audit

function.

The Board considers these

provisions not relevant to

the position of the Company

being an externally managed

investment company with no

employees. The Company has

not therefore reported further in

respect of these provisions.

The AIC Code is available on the

AIC website (www.theaic.co.uk).

It includes an explanation of

how the AIC Code adapts the

Principles and Provisions set

out in the UK Code to make

them relevant for investment

companies.

A description of the main features

of the Company’s internal control

and risk management functions

can be found on pages 47 and

48 of this report.

The Board

Role of the Board

The Board receives monthly

reports and meets at least

quarterly to review the overall

business of the Company and

to consider matters specifically

reserved for its review. At these

meetings, the Board monitors

the investment performance of

the Company. The Directors also

review the Company’s activities

every quarter to ensure that it

adheres to its investment policy

or, if appropriate, to make any

changes to that policy.

Additional ad hoc reports

are received as required and

Directors have access at all

times to the advice and services

of the Company Secretary, who

is responsible for ensuring that

Board procedures are followed

and that applicable rules and

regulations are complied with.

The Board has adopted a

schedule of items specifically

reserved for its decision.

A procedure has been adopted

by which Directors may obtain

independent professional advice

at the expense of the Company

in the furtherance of their duties.

Composition

As at 30 June 2024, following

the resignation of Clive Parritt

and appointment of Ruth

Beechey (on 1 July 2024), the

Board comprised five non-

executive directors, comprising

three females and two males, all

of whom are independent of the

Portfolio Manager.

The Board does not have a

Director with a minority ethnic

background.

Mr White is Chairman of the

Board and has no conflicts

between his interests and those

of shareholders. The Chairman

is also a shareholder. Potential

conflicts are reported to the rest

of the Board who consider such

conflicts and where appropriate

approve them. The Chairman

is not, and has never been,

an employee of the Portfolio

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Manager nor a professional

adviser to the Portfolio Manager

or the Company. The Chairman

does not serve as a director of

any other investment companies

managed by Brown Advisory

LLC.

Tenure

The Board is mindful of the AIC

and UK Corporate Governance

Codes in relation to the tenure

of directors (including the

Chairman) and undertakes

an annual evaluation of its

composition, and that of

its committee, taking into

account the requirements of

the AIC Code. If appropriate,

recommendations are made to

refresh the composition of the

Board and its committee.

Succession Planning

The Directors undertook a

review of the composition of the

Board in 2023 and appointed

an external search consultancy

earlier in 2024 to recruit a non-

executive director as part of

the refreshment of the Board

and ahead of the planned

retirement of Mr Parritt. Nurole

was appointed to undertake a

non-executive search and after

a short list was prepared and

interviewed the decision was

made to appoint Ruth Beechey

as a Director, with effect from

1 July 2024. Nurole has no other

connection with the Company.

Ms Beechey will stand for

election at the forthcoming

AGM.

Diversity

It is seen as a prerequisite that

each member of the Board must

have the skills, experience and

character that will enable them

to contribute to the effectiveness

of the Board and the success of

the Company. Subject to that

overriding principle, diversity

of experience and approach,

including gender diversity,

amongst Board members

is of great value, and it is the

Board’s policy to give careful

consideration to overall Board

balance and diversity when

making new appointments to

the Board.

According to new requirements

of the FCA Listing Rules (Listing

Rule 9.8.7 R), companies are

required to include a statement

in their annual report and

financial statements setting out

whether it has met the following

targets on board diversity as at a

chosen reference date within its

accounting period:

1) At least 40% of individuals

on its board are women;

2) At least one of the senior

board positions (Chairman,

chief executive officer

(CEO), senior independent

director or chief financial

officer (CFO)) is held by a

woman; and

3) At least one individual on

its board is from a minority

ethnic background, defined

to include those from an

ethnic group, other than

a white ethnic group, as

specified in categories

recommended by the Office

for National Statistics.

As an externally-managed

investment company, the

Company does not have a CFO

or CEO. The Board considers

that the senior positions in the

Company are the positions of

Chairman, Chairman of the

Audit and Risk Committee and

Senior Independent Director.

As at 30 June 2024* the

Company makes the following

disclosures:

Corporate Governance continued

Shareholder

Number of Board

members

Percentage

of the Board

Number of senior

positions on

the Board

Men 3 60% 100%

Women 2 40% 40%

Not specified/ prefer not to say

* (including Clive Parritt, excluding Ruth Beechey).

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54 Annual Report and Financial Statements 2024

Re-election of Directors

It was noted by the Board that,

as at 30 June 2024 and at the

time of signing of these Financial

Statements, it did not meet the

third target on ethnic diversity.

The Board is committed to

meeting the FCA Listing Rule

targets set out above and has

considered gender and ethnic

diversity when making the

appointment of Mrs Beechey.

Further information on how

the Board’s composition is

evolving is included in the

Chairman’s Statement on

pages 7 to 13.

Training

The Directors are kept up to date

on corporate governance issues

through materials provided from

time to time by the Company

Secretary.

The Board may obtain training

on aspects of corporate

governance on an individual

basis.

Performance Evaluation

The Board formally reviews

its performance and the

performance of its committee

on an annual basis and in 2023

arranged an externally facilitated

Board effectiveness review.

The Board has not arranged

such an evaluation in 2024 but

anticipates doing so again as the

recent changes in the Board and

committee composition have

settled in.

An informal review took place

for 2024 following the end of the

financial year and each Director

was asked his or her views on

the Board’s effectiveness and to

make recommendations about

how that might be improved.

The performance of the

Chairman was reviewed by the

other Directors and led by Jane

Routledge.

The results of the review

were discussed amongst the

Directors and it was agreed that

the composition of the Board

and its committee reflected

a suitable mix of skills and

experience and that the Board,

as a whole, and its committee

was functioning effectively.

Board Committees

Audit and Risk Committee

The Board has established

an Audit and Risk Committee

and its report can be found on

pages 56 to 58.

The Terms of Reference of

the Committee are published

on the Company website

w ww.brownadvisory.com/basc.

Other Committees

The Board has not established

Remuneration or Nomination

Committees as the functions

of these committees are

performed by the Board as all

Directors are non-executive.

Directors’ fees are considered by

the Board as a whole within the

limits as set out in the Articles of

Association and in accordance

with the remuneration policy

approved by shareholders.

Corporate Governance continued

Shareholder

Number of

Board members

Percentage

of the Board

Number of senior

positions on

the Board

White British or other White (including minority white

groups) 5 100% 100%

Mixed Multiple Ethnic Groups – – –

Asian/AsianBritish – – –

Black/African/Caribbean/Black British – – –

Other ethnic group, including Arab – – –

Not specified/prefer not to say

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The appointment of Directors

is considered by the entire

Board on an ad-hoc basis with

consideration given inter alia

to candidates’ expertise and

maintaining an appropriate

Board balance and composition.

The Board has not established

a Management Engagement

Committee as the functions of

this committee, including the

appointment of the Portfolio

Manager, are performed by the

Board.

Directors’ Attendance at Meetings

Board

Audit and

Risk Committee

Stephen White 5/5 3/3

Ruth Beechey* – –

Lisa Booth 5/5 3/3

Jasper Judd 5/5 3/3

Clive Parritt** 5/5 3/3

Jane Routledge 5/5 3/3

* Ruth Beechey was appointed on 1 July 2024.

** Clive Parritt retired on 30 June 2024.

For and on behalf of the Board

Stephen White

Chairman

20 September 2024

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Composition

As Chairman of the Company’s Audit

and Risk Committee, I am pleased to

present the Committee’s report for

the year ended 30 June 2024.

The Audit and Risk Committee

consists of all Directors. I am

chairman of the Audit and Risk

Committee and a chartered

accountant. All committee members

are independent non-executive

directors.

Mr White continues to be a member

of the Audit and Risk Committee. The

AIC Code permits the Chairman to

be a member of the Audit and Risk

Committee if they were independent

on appointment, but not to chair it.

The Chairman was independent on

appointment and continues to be

so. In view of the size of the Board,

the Directors feel it is appropriate

for him to continue as a member so

that the Audit and Risk Committee

can continue to benefit from his

experience and knowledge.

Report of the Audit and Risk Committee

Jasper Judd

Chairman of the Audit and Risk Committee

Role of the Audit and Risk

Committee

The Audit and Risk Committee meets

at least twice annually to consider the

principal and emerging risks of the

Company, financial reporting by the

Company, the internal controls and

relations with the Company’s external

Auditor. In addition, it reviews the

independence and objectivity of the

Auditor and the effectiveness of the

audit process, the quality of the audit

engagement partner and the audit

team, making a recommendation

to the Board with respect to the

reappointment of the Auditor. It also

provides an opinion as to whether

the Annual Report, taken as a whole,

is fair, balanced and understandable

and provides the information

necessary for shareholders to

assess the Company’s position and

performance, business model and

strategy.

The Company does not have an

internal audit function as most of its

day-to-day operations are delegated

to professional third parties.

The Committee also reviews the

Company’s compliance with the Code

and the AIC Code.

The Audit and Risk Committee has

direct access to the Auditor, the

Heads of Internal Audit, and the

Risk and Compliance function of

the Portfolio Manager, and of the

AIFM and reports its findings to the

Board. The Board retains ultimate

responsibility for all aspects relating

to external financial statements and

other significant published financial

information.

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Independent Auditor and Audit

Tenure

As part of its review of the continuing

appointment of the Auditor, the Audit

and Risk Committee considers the

length of tenure of the audit firm, its

fees and independence from the AIFM

and the Portfolio Manager along with

any matters raised during each audit.

Haysmacintyre LLP (Haysmacintyre)

is the appointed Auditor of the

Company.

This year’s audit was the fifth

undertaken by Haysmacintyre,

and the second led by Laura Mott

as engagement partner, since

Haysmacintyre was appointed in 2019.

The fees paid to Haysmacintyre in

respect of audit services are disclosed

in Note 5 to the Financial Statements

on page 85.

Auditor Effectiveness and

Independence

Auditor effectiveness is assessed

by means of the Auditor’s direct

engagement with the Committee at

Audit and Risk Committee meetings

and also by reference to feedback

from the AIFM, Portfolio Manager

and their employees who have direct

dealings with the Auditor during the

annual audit of the Company.

Disclosure of Information to the

Auditor

The Directors are not aware of any

relevant audit information of which

the Company’s Auditor is unaware.

The Directors also confirm that they

have each taken all the steps required

of a company director to make

themselves aware of any relevant

audit information and to establish that

the Company’s Auditor is aware of

that information.

Non-audit Services

The Committee ensures that

the Auditor’s objectivity and

independence are safeguarded

by requiring pre-approval by the

Committee for all non-audit services

provided to the Company, which takes

into consideration:

 confirmation from the Auditor that

it has adequate arrangements in

place to safeguard their objectivity

and independence in carrying out

such work, within the meaning of

the regulatory and professional

requirements to which they are

subject;

 the non-audit fees to be incurred,

relative to the audit fees;

 the nature of the non-audit

services; and

 whether the Auditor’s skills and

experience make it the most

suitable supplier of such services

and whether they are in a position

to provide them.

The Committee has adopted a

policy that all non-audit services are

subject to its approval. No fee for

such services was payable to the

Auditor for the year under review and

no services were undertaken (2023:

£nil).

Significant Accounting Matters

During its review of the Company’s

Annual Report and Financial

Statements for the year ended

30 June 2024, the Audit and Risk

Committee considered the following

significant issues, including a

robust assessment of principal and

emerging risks and uncertainties in

light of the Company’s activities and

issues communicated by the Auditor

during its review, all of which were

satisfactorily addressed:

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Brown Advisory US Smaller Companies plc

58 Annual Report and Financial Statements 2024

Report of the Audit and Risk Committee

continued

Issue considered How the issue was addressed

Valuation of the

investment portfolio

and existence

 Review of reports from the Portfolio Manager and custodian

Compliance with

section 1158 of the

Corporation Tax Act

2010

 Review of portfolio holdings reports and revenue forecasts to ensure

compliance criteria are met

Calculation of

management fee

 Consideration of methodology used to calculate management fee,

matched against the criteria set out in the Portfolio Management

Agreements

Statement of going

concern

 Review of the investment portfolio, risks and uncertainties and forecast

revenue

Statement In Respect Of The

Annual Report And Financial

Statements

Having taken all available information

into consideration, and having

discussed the content of the Annual

Report and Financial Statements

with the AIFM, Portfolio Manager,

Company Secretary and other third-

party service providers, the Audit

and Risk Committee has concluded

that the Annual Report and Financial

Statements for the year ended 30

June 2024, 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, and has reported on these

findings to the Board.

For and on behalf of the

Audit and Risk Committee

Jasper Judd

Chairman of the

Audit and Risk Committee

20 September 2024

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Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

for the year ended 30 June 2024 59

Strategic Report Governance Company InformationFinancial Statements

Directors’ Remuneration Report and Policy

The Board is pleased to present the

Company’s annual remuneration report

for the year ended 30 June 2024,

together with its remuneration policy,

in accordance with Schedule 8 of The

Large and Medium-sized Companies

and Groups (Accounts and Reports)

(Amendment) Regulations 2013.

The law requires the Company’s

Auditor to audit certain of the

disclosures provided. Where

disclosures have been audited, they

are indicated as such.

The Auditor’s opinion is included in

their report on pages 64 to 73.

Statement by the Chairman

The Board’s policy on remuneration is

set out below.

The Directors of the Company

are non-executive and by way of

remuneration receive an annual fee,

payable quarterly in arrears.

Details of the total emoluments

paid to Directors for the years

ended 30 June 2023 and 30 June

2024 are provided in the Annual

Report on Remuneration on page

61.

The Company does not award any

other remuneration or benefits to the

Chairman or Directors. There are no

bonus schemes, pension schemes,

share option or long-term incentive

schemes in place for the Directors.

Directors’ Remuneration Policy

The remuneration policy of the

Company was approved by

shareholders at the 2023 AGM for a

maximum of three years.

The Company’s current remuneration

policy is that fees payable to Directors

are commensurate with the amount

of time Directors are expected to

spend on the Company’s affairs,

whilst seeking to ensure that fees

are set at an appropriate level so as

to enable candidates of a sufficient

calibre and possessing suitable

knowledge and experience to be

recruited. The Company’s Articles

of Association state the maximum

aggregate amount of fees that can

be paid to Directors in any one year.

This is currently set at £185,000 per

annum and shareholder approval is

required for any changes to this.

Directors’ fees are normally reviewed

and updated with effect from 1

January each year. Until 31 December

2023, Directors’ annual fees were:

Chairman, £37,000; Chairman of the

Audit and Risk Committee, £33,500;

and non-executive Directors,

£28,000. With effect from 1 January

2024 Directors’ annual fees were

revised to the following annual rates

and are the rates currently payable:

Role

Amount

payable

per annum

Chairman of the Board £39,200

Chairman of the Audit

and Risk Committee £35,500

Non-Executive Director £29,700

The Board plans to revise Director

fees next year in line with the

Company’s peer group, with effect

from 1 January 2025.

Each Director is entitled to a base fee.

The Chairman of the Board is paid

a higher fee than other Directors to

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Brown Advisory US Smaller Companies plc

60 Annual Report and Financial Statements 2024

Directors’ Remuneration Report and Policy

continued

reflect the additional work entailed by

the role. The Chairman of the Audit

and Risk Committee also receives a

higher fee on the same basis.

The Board is authorised to obtain, at

the Company’s expense, outside legal

or other professional advice on any

matters within its Terms of Reference.

The Board did not seek external

advice during the year under review.

The Board has not established a

Remuneration Committee and

any review of the Directors’ fees is

undertaken by the Board as a whole

and has regard to the level of fees paid

to non-executive directors of other

investment companies of equivalent

size.

Directors’ Service Contracts

No Director has a contract of service

with the Company. Accordingly,

the Directors are not entitled to

any compensation in the event of

termination of their appointment or

loss of office, other than the payment

of any outstanding fees.

It is the Company’s policy for all

Directors to stand for re-election

annually. Any new Director

appointed is subject to election

by shareholders at the next AGM

following their appointment. The

terms and conditions of Directors’

appointments are set out in formal

letters of appointment. The dates of

appointment are set out below:

Director

Date of

Appointment

Stephen White 1 October 2020

Ruth Beechey 1 July 2024

Lisa Booth 29 September 2015

Jasper Judd 1 October 2022

Jane

Routledge 1 April 2023

Annual Report on Remuneration

A single figure for the total

remuneration of each Director is set

out in the table below for the years

ended 30 June 2024 and 30 June

2023, respectively.

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Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

for the year ended 30 June 2024 61

Strategic Report Governance Company InformationFinancial Statements

Directors’ emoluments for the period (audited)

30 June 2024 30 June 2023

Fees

Expenses

Total

remuneration

for the year ended

Fees

Expenses

Total

remuneration

for the year ended

Stephen White 38,100 – 38,100 35,825 – 35,825

Lisa Booth

28,850 997 29,847 30,300 562 30,862

Jasper Judd

†**

34,500 – 34,500 22,763 – 22,763

Clive Parritt

††

28,850 – 28,850 27,1 25 – 27,125

Jane Routledge

†††

28,850 – 28,850 7,000 – 7,000

Tina Soderlund-Boley

††††

– – – 27,1 25 – 27,125

Total 159,150 997 160,147 150,138 562 150,700

* Chairman of the Audit and Risk Committee until 6 February 2023.

** Chairman of the Audit and Risk Committee from 6 February 2023.

† Covers the period 1 October 2022 to 30 June 2024.

†† Clive Parritt resigned on 30 June 2024.

††† Covers the period 1 April 2023 to 30 June 2024.

†††† Tina Soderlund-Boley resigned on 30 June 2023.

Expenditure By The Company

On Directors’ Remuneration

Compared With Distributions To

Shareholders

The table below compares the

remuneration payable to Directors to

distributions made to shareholders

during the financial year under review

and the prior year. In considering these

figures, shareholders should take

into account the Company’s principal

investment objective of achieving

capital growth. In the year ended

30 June 2024, the Company’s capital

return was a net gain of £5.3 million

(2023: net gain of £16.0 million).

Director

30 June 2024

£’000

30 June

2023

£’000

Remuneration

paid to

Directors 159 151

Distributions

shareholders

– dividends – –

Total value

of shares

repurchased 1,199 –

Statement Of Voting At The Last

AGM

An ordinary resolution for

the approval of the Directors’

Remuneration Report will be put

to shareholders annually at the

Company’s Annual General Meeting.

This vote is advisory and not binding

on the Company, nor does it affect

the remuneration payable to any

individual Director. However, it does

give shareholders the opportunity

to inform the Board of their views

on the Directors’ remuneration.

The Directors’ remuneration policy

sets out the Company’s policy on

Directors’ remuneration.

The following sets out the votes

received at the last AGM of the

shareholders of the Company, held

on 6 November 2023, in respect

of the approval of the Directors’

Remuneration Report and the

Directors’ Remuneration Policy.

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Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

Brown Advisory US Smaller Companies plc

62 Annual Report and Financial Statements 2024

Votes cast for Votes cast against

Number of votes

withheld

Director Number % Number % Total votes cast

Directors’

Remuneration Report 4,082,643 99.70 12,432 0.30 4,095,075 163,718

Directors’

Remuneration Policy 4,082,187 99.70 12,432 0.30 4,094,619 164,174

Directors’ Interests

The Directors who held office at the

end of the financial year covered by

this report and their beneficial interests

in the Ordinary shares of the Company

are detailed in the table above. There

is no requirement for a Director to hold

shares in the Company.

The Directors’ interests in contractual

arrangements with the Company

are as detailed in Note 14 to the

Financial Statements. Subject to

these exceptions, no Director was

a party to or had any interest in any

contract or arrangement with the

Company at any time during the year

or subsequently.

Directors’ Interests In Ordinary shares

(audited)

30 June

2024

30 June

2023

Lisa Booth 463 463

Jasper Judd 2,768 2,000

Clive Parritt 10,000 10,000

Jane Routledge 1,500 –

Stephen White 20,000 20,000

There have been no further changes

to the Directors’ shareholdings since

the year end.

As at 16 September 2024, the latest

practicable date prior to publication

of this document, no further changes

had been notified.

Directors’ Remuneration Report and Policy

continued

Performance to 30 June 2024

The graph below provides details of

the Company’s Ordinary share price

performance compared against the

Russell 2000 Total Return Index,

expressed in sterling.

Performance from 30 June 2015 to

30 June 2024

NAV

Share Price

Benchmark

100

150

200

250

300

Jun-14

Jun-15

Jun-16

Jun-17

Jun-18

Jun-19

Jun-20

Jun-21

Jun-22

Jun-23

Jun-24

Source: Datastream

On behalf of the Board and in accordance

with Part 2 of Schedule 8 of the Large and

Medium-sized Companies and Groups

(Accounts and Reports) (Amendment)

Regulations 2013, I confirm that the

Directors’ Remuneration Report and

policy summarises, for the year ended

30 June 2024, the review undertaken and

the decisions made regarding the fees

paid to the Board, as well as the future

remuneration policy of the Company.

By order of the Board

Stephen White

Chairman

20 September 2024

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Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

for the year ended 30 June 2024 63

Strategic Report Governance Company InformationFinancial Statements

Statement of Directors’ Responsibilities

The Directors are responsible

for preparing the Annual Report

and Financial Statements in

accordance with applicable law

and regulation.

Company law requires the

Directors to prepare financial

statements for each financial

year. Under that law the Directors

have elected to prepare financial

statements in accordance with

United Kingdom Generally

Accepted Accounting Practice

(United Kingdom Accounting

Standards and applicable laws)

including Financial Reporting

Standard 102, the financial

reporting standard applicable

in the UK and the Republic of

Ireland.

Under company law the

Directors must not approve the

financial statements unless they

are satisfied that they give a

true and fair view of the state of

affairs of the Company and of the

return or loss of the Company

for that period. In preparing

those financial statements, the

Directors are required to:

(a) select suitable accounting

policies and then apply them

consistently;

(b) make judgements and

accounting estimates

that are reasonable and

prudent;

UK Accounting Standards

have been followed, subject

to any material departures

disclosed and explained in

the financial statements;

and

(d) prepare the financial

statements on the going

concern basis unless it is

inappropriate to presume

that the Company will

continue in business.

The Directors are responsible for

keeping adequate accounting

records that are sufficient to

show and explain the Company’s

transactions and disclose with

reasonable accuracy at any

time the financial position of

the Company and enable them

to ensure that the financial

statements comply with

the Companies Act 2006.

They are also responsible for

safeguarding the assets of

the Company and hence for

taking reasonable steps for the

prevention and detection of

fraud and other irregularities.

Under applicable law and

regulations, the Directors are

also responsible for preparing

a Strategic Report, Report

of the Directors, Directors’

Remuneration Report and

Statement of Corporate

Governance that comply with

that law and those regulations.

The Directors are responsible

for the maintenance and integrity

of the corporate and financial

information included

on the Company website

w ww.brownadvisory.com/basc

which is a website maintained by

Brown Advisory LLP. Visitors to

the website need to be aware that

legislation in the United Kingdom

governing the preparation

and dissemination of financial

statements may differ from

legislation in other jurisdictions.

Each of the Directors, who are

listed on pages 42 and 43 of this

report, confirms to the best of

their knowledge that:

1. the financial statements,

prepared in accordance

with the applicable set of

accounting standards, give

a true and fair view of the

assets, liabilities, financial

position and profit or loss of

the Company; and

2. the Strategic Report

includes a fair review of

the development and

performance of the Company,

together with a description

of the principal risks and

uncertainties that the

Company faces; and

3. in their opinion the Annual

Report and Financial

Statements, taken as a

whole, are fair, balanced and

understandable and provide

the information necessary

to assess the Company’s

position and performance,

business model and strategy.

So far as each Director is

aware at the time the report is

approved:

1. there is no relevant audit

information of which the

Company’s Auditor is

unaware; and

2. the Directors have taken all

steps required of a company

director to make themselves

aware of any relevant audit

information and to establish

that the Company’s Auditor

has been made aware of that

information.

By order of the Board

Stephen White

Chairman

20 September 2024

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Brown Advisory US Smaller Companies plc

64 Annual Report and Financial Statements 2024

Independent Auditor’s Report

To the Members of Brown Advisory US Smaller Companies PLC

Our opinion on the financial

statements

We have audited the financial

statements of Brown Advisory

US Smaller Companies plc

(‘the Company’) for the year

ended 30 June 2024 which

comprise the Statement of

Comprehensive Income, the

Statement of Financial Position,

the Statement of Changes in

Equity, the Statement of Cash

Flows and the notes to the

financial statements, including

a summary of significant

accounting policies. The

financial reporting framework

that has been applied in their

preparation is applicable law

and United Kingdom Accounting

Standards, including Financial

Reporting Standard 102 ‘The

Financial Reporting Standard

applicable in the UK and

Republic of Ireland’ (United

Kingdom Generally Accepted

Accounting Practice).

In our opinion:

 the financial statements give

a true and fair view of the

state of the Company’s affairs

as at 30 June 2024 and of

the return for the year then

ended;

 the financial statements

have been properly prepared

in accordance with United

Kingdom Generally Accepted

Accounting Practice; and

 the financial statements have

been prepared in accordance

with the requirements of the

Companies Act 2006.

Basis for opinion

We conducted our audit in

accordance with International

Standards on Auditing (UK)

(ISAs (UK)) and applicable law.

Our responsibilities under those

standards are further described

in the Auditor’s responsibilities

for the audit of the financial

statements section of our

report. We are independent of

the Company in accordance

with the ethical requirements

that are relevant to our audit of

the financial statements in the

UK, including the FRC’s Ethical

Standard as applied to listed

public interest entities, and we

have fulfilled our other ethical

responsibilities in accordance

with these requirements. We

believe that the audit evidence

we have obtained is sufficient

and appropriate to provide a

basis for our opinion.

An overview of the scope of

our audit

We planned the scope of our

audit to ensure that we sufficient

audit evidence to give an

audit opinion on the financial

statements as a whole, taking

into account the structure of

the Company, the accounting

processes and controls, and the

industry in which it operates.

The Company’s accounting

has been outsourced to J.P.

Morgan Chase Bank N.A, who

are responsible for maintaining

the Company’s accounting

records. Accordingly, we review

their involvement as a service

organisation, use reports and

data provided to us by them,

and consider the operation

of controls and procedures

operated by J. P. Morgan Chase

Bank N.A. that are relevant to

our audit.

We obtained our audit evidence

from substantive tests and as

part of our risk assessment,

we understood and assessed

the internal controls in place

at the Portfolio Managers,

and the accounting service

provider to the extent relevant

to our audit. This assessment

of the operating and accounting

structure in place at these

organisations involved obtaining

and analysing the relevant

control reports issued by the

independent service auditor of

these entities in accordance with

generally accepted assurance

standards for such work.

Following this assessment,

we applied professional

judgement to determine the

extent of testing required over

each balance in the financial

statements.

Job No: 52458 Proof Event: 30 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

for the year ended 30 June 2024 65

Strategic Report Governance Company InformationFinancial Statements

Key audit matters: Our assessment of risks of material misstatement

Key audit matters are those matters that, in our professional judgement, were of most significance in

the audit of the financial statements of the current period and include the most significant assessed

risks of material misstatement (whether or not due to fraud) that we identified. These matters included

those which had the greatest effect on: the overall audit strategy; the allocation of resources in the

audit; and directing the efforts of the engagement team. These matters were addressed in the context

of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not

provide a separate opinion on those matters.

Key audit matter The risk Our response to the risk:

Risk of fraud in

revenue recognition

Revenue for the

year is £1,198,000

(2023: £984,000)

and is disclosed in

note 3 to the financial

statements.

The accounting policy

for revenue is described

in note 2b(iv).

Under ISA 240 there is a presumed

significant risk (that may be

rebutted) that revenue may be

materially misstated due to improper

revenue recognition. We have not

rebutted this risk and therefore

are required to consider the risk

of fraud in revenue recognition as

a significant risk and accordingly

respond to the risks of improper

revenue recognition.

As per our assessment, there is a

significant risk over the occurrence of

income. Due to the entity being listed

there is incentive to overstate income

to improve reported performance.

This risk may also arise if income is

recognised in the incorrect accounting

period through the application of

inappropriate accounting treatment.

For example inaccurate recognition

of income through the failure to

recognise proper income entitlements

or applying appropriate accounting

treatment.

In addition to the above, the

Directors are required to exercise

their judgement in determining

whether income receivable in the

form of special dividends should be

classified as “revenue” or “capital”.

We have undertaken the

following procedures to verify

the appropriateness of revenue

recognition:

 To test the occurrence of

revenue, we traced dividend

income from the accounting

records to dividend declarations

and recalculated the expected

dividend recognised. This was

performed on a sample basis;

 To assess the occurrence of

revenue, we agreed the receipt of

dividends to bank statements on

a sample basis;

 For a sample of accrued

dividends, we assessed the date

of the dividend declaration date

and whether the Company had

proper legal title to recognise

those dividends;

 We reviewed a sample of dividend

income transactions occurring

around the year-end date (either

side of the reporting period end)

to test the appropriate recognition

of dividend income around the

year end;

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Brown Advisory US Smaller Companies plc

66 Annual Report and Financial Statements 2024

Key audit matter The risk Our response to the risk:

 We reviewed the classification of

dividends and agreed no special

dividends were received during

the year; and

 We obtained and reviewed

the SOC1 report of the fund

administrator and portfolio

manager to obtain an

understanding of the relevant

controls over revenue recognition.

Key observations

communicated to the

Audit Committee

Based on the procedures performed, we gained satisfactory assurance

over the appropriateness of the revenue recognition and did not identify any

matters or other observations to report to the audit committee.

Independent Auditor’s Report continued

Job No: 52458 Proof Event: 30 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

for the year ended 30 June 2024 67

Strategic Report Governance Company InformationFinancial Statements

Key audit matter The risk Our response to the risk:

Valuation of

investments

Investment valuations

at the year-end

were £165,925,000

(2023: £159,134,000)

which were all listed

investments.

Disclosure of these

investments is included

in note 8 to the financial

statements.

The accounting policy

for the valuation

of investments is

described in note

2b(i) and (ii) of the

financial statements.

Investments represent the most

significant item in the statement of

financial position and an error within

the valuation of the Company’s

investment portfolio could have

a material impact on the financial

position and performance of the

Company.

We do not consider these

investments to be at a high risk

of significant misstatement, or to

be subject to a significant level of

judgement because they comprise

liquid, quoted investments. However,

we do note the significant risk of

fraud in this area due to the possible

incentives for the Portfolio Manager

to manipulate the Net Asset Value to

increase management fees.

Due to their materiality in the

context of the financial statements

as a whole, they are considered to

be one of the areas which has the

greatest impact on our overall audit

strategy and allocation of resources

in planning and completing our audit

so therefore was considered a key

audit matter.

We have undertaken the following

procedures to gain assurance over

the valuation of the investments:

 We agreed the value of

investments to an independent

source. This was performed on a

sample basis;

 We agreed the exchange rates

applied to US stocks to an

independent source. This was

performed on a sample basis;

 We agreed the year-end

investment holdings to custodian

confirmation;

 We assessed the accuracy of the

calculation of gains and losses on

investments at fair value through

profit and loss;

 We assessed the appropriateness

and presentation of the gains and

losses on investments at fair value

through profit and loss within the

financial statements disclosures;

and

 We obtained and reviewed

the SOC1 report of the fund

administrator and portfolio

manager to obtain an

understanding of the relevant

controls over the valuation of

investments

Key observations

communicated to the

Audit Committee

Based on the procedures performed we gained satisfactory assurance over

the valuation of the Company’s investment portfolio and did not identify any

matters or other observations to report to the Audit Committee.

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Brown Advisory US Smaller Companies plc

68 Annual Report and Financial Statements 2024

Our application of materiality

We apply the concept of

materiality both in planning

and performing our audit,

and in evaluating the effect of

misstatements on our audit and

on the financial statements. For

the purposes of determining

whether the financial

statements are free from

material misstatement we define

materiality as the magnitude of

an omission or misstatement

that, individually or in the

aggregate, could reasonably

be expected to influence

the economic decisions of a

reasonably knowledgeable

person, relying on the financial

statements.

Materiality

Materiality provides a basis for

determining the nature and

extent of our audit procedures.

We determined materiality for

the Company to be £1,750,000

which is approximately 1% of the

Company’s net asset value at 30

June 2024. Net asset value has

been used as the benchmark for

materiality as this is considered

to be the critical performance

measure used by investors to

assess the performance of the

Company and is a key driver of

shareholder value.

Given the importance of the

distinction between revenue and

capital for the Company we also

applied a separate materiality

level of £34,000 for the revenue

column of the Statement of

Comprehensive Income. We set

this level at approximately 2% of

total expenditure.

Performance materiality

On the basis of our risk

assessments, together with our

assessment of the Company’s

overall control environment

our assessment was that

performance materiality

should be set at 70% of our

overall materiality level, namely

£1,220,000. We have set

performance materiality at this

percentage due to the absence

of significant errors noted in the

current year audit and based on

our assessment of the control

framework at the Company.

We also applied a separate

performance materiality level

of £23,800 for the revenue

column of the Statement of

Comprehensive Income. We

set this at 70% of the separate

revenue account materiality

level.

Reporting threshold

An amount below which

identified misstatements are

considered as being clearly

trivial. We determined based on

our calculations that we would

report to the Committee all

audit differences in excess of

£87,300 as well as differences

below that threshold that, in

our view, warranted reporting

on qualitative grounds. We also

report to the Audit Committee

on disclosure matters that

we identified when assessing

the overall presentation of

the financial statements. The

reporting threshold for the

Revenue Return column of the

Statement of Comprehensive

Income was set at £1,700.

Conclusions relating to going

concern

In auditing the financial

statements, we have concluded

that the directors’ use of

the going concern basis of

accounting in the preparation

of the financial statements

is appropriate. The Directors

assessment on going concern

is summarised in the Directors’

report and we are of the

opinion that this assessment is

reasonable.

Our evaluation of the directors’

assessment of the Company’s

ability to continue to adopt

the going concern basis of

accounting included:

 Evaluating the

appropriateness of the

Directors’ method of

assessing the going concern

position in light of market

volatility and the present

uncertainties by reviewing

the information used by the

Directors in comprising their

assessment;

 Considering the liquidity of

the investment portfolio and

its ability to meet the liabilities

of the Company as and when

they fall due;

Independent Auditor’s Report continued

Job No: 52458 Proof Event: 30 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

for the year ended 30 June 2024 69

Strategic Report Governance Company InformationFinancial Statements

 Considering the continuation

vote at the 2026 AGM;

 Considering the current cash

position;

 Reviewing any litigation and

claims against the Company;

 Considering the composition

of the Company’s future cash

flows and establishing they

are matched against revenue

income; and

 Considering the ability of the

key service organisations to

continue providing services

to the Company.

Based on the work performed,

we have not identified any

material uncertainties relating

to events or conditions that,

individually or collectively, may

cast significant doubt on the

Company’s ability to continue as

a going concern for a period of at

least twelve months from when

the financial statements are

authorised for issue.

In relation to the Company’s

reporting on how it has applied

the UK Corporate Governance

Code, we have nothing material

to add or draw attention to

in relation to the directors’

statement in the financial

statements about whether

the directors considered it

appropriate to adopt the going

concern basis of accounting.

Our responsibilities and the

responsibilities of the directors

with respect to going concern

are described in the relevant

sections of this report.

We have nothing to report on

the other information in the

Annual Report

The Directors are responsible for

the other information presented

in the Annual Report together

with the financial statements.

Our opinion on the financial

statements does not cover the

other information and, except to

the extent otherwise explicitly

stated in this report, we do not

express any form of assurance

conclusion thereon.

Our responsibility is to read

the other information and, in

doing so, consider whether

the other information is

materially inconsistent with

the financial statements or

our knowledge obtained in the

audit or otherwise appears

to be materially misstated.

If we identify such material

inconsistencies or apparent

material misstatements, we are

required to determine whether

there is a material misstatement

in the financial statements or

a material misstatement of the

other information. If, based on

the work we have performed, we

conclude that there is a material

misstatement of the other

information we are required to

report on that fact.

Strategic report and

Directors’ report

Based solely on our work on the

other information:

 we have not identified

material misstatements in

the strategic report and the

Directors’ report;

 in our opinion the information

given in those reports for the

financial year is consistent

with the financial statements;

and

 in our opinion those reports

have been prepared in

accordance with the

Companies Act 2006.

Directors’ remuneration

report

In our opinion the part of the

directors’ remuneration report

to be audited has been properly

prepared in accordance with the

Companies Act 2006.

Disclosures of emerging

principal risks, going concern

and viability

We are required to perform

procedures to identify

whether there is a material

inconsistency between the

directors’ disclosures in respect

of emerging and principal risks,

going concern and the viability

statement, and the financial

statements and our audit

knowledge.

Based on the knowledge we

acquired during our financial

statements audit, we have

nothing material to add or draw

attention to in relation to:

 The Directors’ confirmation

set out on page 34 in the

annual report that they

have carried out a robust

assessment of the principal

risks facing the Company,

including those that would

threaten its business

model, future performance,

solvency or liquidity and the

disclosures in the annual

report set out on pages 34 to

37 that describe the principal

Job No: 52458 Proof Event: 30 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

Brown Advisory US Smaller Companies plc

70 Annual Report and Financial Statements 2024

risks and explain how they are

being managed or mitigated;

 The Directors’ statement

in the financial statements

about whether they

considered it appropriate

to adopt the going concern

basis of accounting in

preparing them, and

their identification of any

material uncertainties to the

Company’s ability to continue

to do so over a period of at

least 12 months from the date

of approval of the financial

statements; and

 The Directors’ viability

statement on page 34 in the

annual report as to how they

have assessed the prospects

of the Company, over what

period they have done so and

why they consider that period

to be appropriate, and their

statement as to whether they

have a reasonable expectation

that the Company will be able

to continue in operation and

meet its liabilities as they fall

due over the period of their

assessment, including any

related disclosures drawing

attention to any necessary

qualifications or assumptions.

We are also required to review

the viability statement, set out

on page 34 under the Listing

Rules. Based on the above

procedures, we have concluded

that the above disclosures are

materially consistent with the

financial statements and our

audit knowledge.

Our work is limited to assessing

these matters in the context of

only the knowledge acquired

during our financial statements

audit. As we cannot predict

all future events or conditions

and as subsequent events may

result in outcomes that are

inconsistent with judgements

that the above disclosures are

materially consistent with the

financial statements and our

audit knowledge.

Corporate Governance

disclosures

We are required to perform

procedures to identify whether

there is a material inconsistency

between the directors’ corporate

governance disclosures and the

financial statements and our

audit knowledge.

We have reviewed the directors’

statement in relation to going

concern, longer-term viability

and that part of the Corporate

Governance Statement relating

to the Company’s compliance

with the provisions of the UK

Corporate Governance Code

specified for our review by the

Listing Rules.

In this context, we also have

nothing to report in regard to

our responsibility to specifically

address the following items in

the other information and to

report as uncorrected material

misstatements of the other

information where we conclude

that those items meet the

following conditions:

 The Directors’ statement

in the financial statements

about whether they

considered it appropriate

to adopt the going concern

basis of accounting in

preparing them, and

their identification of any

material uncertainties to the

Company’s ability to continue

to do so over a period of at

least 12 months from the date

of approval of the financial

statements;

 The Directors’ statement

on page 34 in the annual

report as to how they have

assessed the prospects of

the Company, over what

period they have done so and

why they consider that period

to be appropriate;

 The Directors’ statement

as to whether they have a

reasonable expectation that

the Company will be able to

continue in operation and

meet its liabilities as they

fall due over the period of

their assessment, including

any related disclosures

drawing attention to any

necessary qualifications or

assumptions.

 The Directors’ confirmation

set out on page 34 in the

annual report that they

have carried out a robust

assessment of the principal

risks facing the Company,

Independent Auditor’s Report continued

Job No: 52458 Proof Event: 30 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

for the year ended 30 June 2024 71

Strategic Report Governance Company InformationFinancial Statements

including those that would

threaten its business

model, future performance,

solvency or liquidity and the

disclosures in the annual

report set out on pages 34 to

37 that describe the principal

risks and explain how they are

being managed or mitigated;

 The Directors’ statement

on fair, balanced and

understandable set out on

page 49 – the statement

given by the Directors

that they consider the

annual report and financial

statements taken as a

whole is fair, balanced and

understandable and provides

the information necessary

for shareholders to assess

the Company’s performance,

business model and strategy,

is materially inconsistent with

our knowledge obtained in

the audit; or

 The section of the Annual

Report that describes the

review of effectiveness of risk

management and internal

control systems; or

 the Audit Committee report

set out on pages 56 to 58

including the significant

issues that the audit

committee considered

in relation to the financial

statements, and how these

issues were addressed; and

 The Directors’ statement

of compliance with the UK

Corporate Governance

Code set out on page 52 –

the parts of the Directors’

statement required under

the Listing Rules relating to

the Company’s compliance

with the UK Corporate

Governance Code containing

provisions specified for

review by the auditor in

accordance with Listing Rule

9.8.10R(2) do not properly

disclose a departure from a

relevant provision of the UK

Corporate Governance Code.

We are required to review

the part of the Corporate

Governance Statement relating

to the Company’s compliance

with the provisions of the UK

Corporate Governance Code

specified by the Listing Rules for

our review. We have nothing to

report in this respect.

Matters on which we are

required to report by

exception

In the light of the knowledge and

understanding of the Company

and its environment obtained

in the course of the audit, we

have not identified material

misstatements in;

 the Strategic Report or the

Directors’ Report; or

 the information about

internal control and risk

management systems in

relation to financial reporting

processes and about share

capital structures, given in

compliance with rules 7.2.5

and 7.2.6 of the FCA Rules.

We have nothing to report

in respect of the following

matters in relation to which the

Companies Act 2006 requires

us to report to you if, in our

opinion:

 adequate accounting

records have not been kept

by the Company, or returns

adequate for our audit have

not been received from

branches not visited by us; or

 the Company financial

statements and the part of

the directors’ remuneration

report to be audited are

not in agreement with the

accounting records and

returns; or

 certain disclosures of

directors’ remuneration

specified by law are not

made; or

 we have not received all the

information and explanations

we require for our audit; or

 a corporate governance

statement has not been

prepared by the parent

company.

Responsibilities of Directors

As explained more fully in the

Directors’ Responsibilities

Statement, the Directors are

responsible for the preparation

of the financial statements and

for being satisfied that they

give a true and fair view, and

for such internal control as the

directors determine is necessary

to enable the preparation

of financial statements

that are free from material

misstatement, whether due to

fraud or error.

In preparing the financial

statements, the directors are

responsible for assessing the

Company’s ability to continue

as a going concern, disclosing,

as applicable, matters related to

going concern and using going

Job No: 52458 Proof Event: 30 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

Brown Advisory US Smaller Companies plc

72 Annual Report and Financial Statements 2024

concern basis of accounting

unless the directors either

intend to liquidate the Company

or to cease operations, or have

no realistic alternative to do so.

Auditor’s responsibilities

for the audit of the financial

statements

Our objectives are to obtain

reasonable assurance

about whether the financial

statements as a whole are free

from material misstatement,

whether due to fraud or error,

and to issue an auditor’s report

that includes our opinion.

Reasonable assurance is a

high level assurance, but not

a guarantee that an audit

conducted in accordance with

ISAs (UK) will always detect

material misstatement when

it exists. Misstatements can

arise from fraud or error and

are considered material if,

individually or in aggregate, they

can reasonably be expected to

influence the economic decisions

of users taken on the basis of

these financial statements.

A further description of

our responsibilities for

the audit of the financial

statements is located on the

Financial Reporting Council’s

website at: www.frc.org.uk/

auditorsresponsibilities. This

description forms part of our

auditor’s report.

Explanation as to what extent

the audit was considered

capable of detecting

irregularities, including fraud

The objectives of our audit, in

respect to irregularities including

fraud are:

 To identify and assess

the risks of material

misstatement of the financial

statements due to fraud;

 To obtain sufficient

appropriate audit evidence

regarding the assessed risks

of material misstatement

due to fraud, through

designing and implementing

appropriate responses; and

 To respond appropriately

to fraud or suspected fraud

identified during the audit.

However, the primary

responsibility for the prevention

and detection of fraud rests

with both those charged with

governance of the entity and the

entities delegated with the day-

to-day responsibilities and the

outsourced service providers.

Irregularities, including fraud,

are instances of non-compliance

with laws and regulations. We

design procedures in line with

our responsibilities, outlined

above, to detect material

misstatements in respect

of irregularities, including

fraud. The extent to which our

procedures are capable of

detecting irregularities, including

fraud is detailed below:

 We gained an understanding

of the legal and regulatory

framework applicable to the

Company and the industry

in which it operates, and

considered the risk of acts

by the Company which were

contrary to applicable laws

and regulations, including

fraud;

 We considered the significant

laws and regulations to

the Companies Act 2006,

the FCA listing and DTR

rules, the principles of the

AIC Code of Corporate

Governance, industry

practice represented by the

AIC SORP, the applicable

accounting framework and

the Company’s qualification

as an investment trust

under UK tax legislation as

any non-compliance of this

would lead to the Company

losing various deductions and

exemptions from corporation

tax; and

 We understood how the

Company is complying with

those frameworks through

discussions with the Audit

Committee and key service

providers in combination with

a review of the Company’s

documented policies and

procedures.

We focused on laws and

regulations that could give rise to

a material misstatement in the

Company financial statements.

Our tests included:

Independent Auditor’s Report continued

Job No: 52458 Proof Event: 30 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

for the year ended 30 June 2024 73

Strategic Report Governance Company InformationFinancial Statements

 Agreement of the financial

statement disclosures

to underlying supporting

documentation;

 Enquiries of management

and those charged with

governance relating to

the existence of any non-

compliance with laws and

regulations;

 Review of minutes of board

meetings throughout the

period to identify and

instance of non-compliance

with laws and regulations;

and

 Reviewing the calculation in

relation to Investment Trust

compliance to check that

the Company was meeting

its requirements to retain its

Investment Trust status.

We evaluated the Directors and

key service providers incentives

and opportunities for fraudulent

manipulation of the financial

statements (including the risk

of override of controls) and

determined that the occurrence

of fraud is low given the activities

and operations of the Company.

If fraud were to occur it would

likely be collusive in nature

and probably occur through

posting inappropriate manual

journal entries to revenue and

investments. Audit procedures

performed by the engagement

team included:

 Discussions with Audit

Committee and key

service providers including

consideration of known or

suspected instances of non-

compliance with laws and

regulation and fraud;

 Evaluating controls designed

to prevent and detect

irregularities; and

 Identifying and testing

journals, in particular

manual journal entries

posted through revenue

and investments, postings

containing unusual phrases

or with unusual descriptions.

Other matters we are

required to address

Following recommendation of

the Audit Committee, we were

appointed by the Shareholders

to audit the financial statements

for the year ending 30 June

2020 and subsequent financial

periods. The period of total

uninterrupted engagement is

therefore five years.

The non-audit services

prohibited by the FRC’s Ethical

Standard were not provided to

the Company and we remain

independent of the Company in

conducting our audit.

Our audit opinion is consistent

with the additional report to the

Audit Committee.

Use of our report

This report is made solely to the

Company’s members, as a body,

in accordance with Chapter 3

of Part 16 of the Companies

Act 2006. Our audit work has

been undertaken so that we

might state to the Company’s

members those matters we are

required to state to them in an

auditor’s report and for no other

purpose. To the fullest extent

permitted by law, we do not

accept or assume responsibility

to anyone other than the

Company and the Company’s

members as a body, for our

audit work, for this report, or for

the opinions we have formed.

Laura Mott

Senior Statutory Auditor

for and on behalf of

Haysmacintyre LLP Statutory

Auditor, Chartered Accountants

London

20 September 2024

Job No: 52458 Proof Event: 30 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

Brown Advisory US Smaller Companies plc

74 Annual Report and Financial Statements 2024

Strategic Report Governance Report Financial Statements Company Information

Financial Statements

Job No: 49700 Proof Event: 13 Black Line Level: 4 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2023 T: 0207 055 6500 F: 020 7055 6600

for the year ended 30 June 2024 75

Strategic Report Governance Report

Financial Statements Company Information

Job No: 52458 Proof Event: 30 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

76 Annual Report and Financial Statements 2024

Brown Advisory US Smaller Companies plc

for the year ended 30 June 2024

2024 2023

Note

Revenue

Return

£’000

Capital

Return

£’000

Total

£’000

Revenue

Return

£’000

Capital

Return

£’000

Total

£’000

Gains from investments held

at fair value through profit or

loss 8 – 5,391 5,391 – 16,474 16,474

Foreign exchange loss – (65) (65) – (746) (746)

Investment income 3 1,018 – 1,018 873 – 873

Other Income 3 180 – 180 111 – 111

Total income 1,198 5,326 6,524 984 15,728 16,712

Management fee 4 (1,222) – (1,222) (1,172) – (1,172)

Other expenses 5 (578) (2) (580) (521) (2) (523)

Total expenses (1,800) (2) (1,802) (1,693) (2) (1,695)

Return before taxation (602) 5,324 4,722 (709) 15,726 15,017

Taxation 6 (126) – (126) (106) 396 290

Net return after taxation (728) 5,324 4,596 (815) 16,122 15,307

Net return per Ordinary

share 7 (6.11)p 44.68p 38.57p (6.82)p 134.89p 128.07p

The total column of this statement is the profit and loss account of the Company.

The ‘Revenue’ and ‘Capital’ columns represent supplementary information prepared under guidance

issued by The Association of Investment Companies. The Company has no other comprehensive

income, and therefore the net return after taxation is also the total comprehensive income for the year.

All revenue and capital items in the above statement derive from continuing operations. No operations

were acquired or discontinued in the year.

Statement of Comprehensive Income

The Notes on pages 81 to 92 form part of these Financial Statements.

for the year ended 30 June 2024 77

Job No: 52458 Proof Event: 30 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

Strategic Report Governance Report Financial Statements Company Information

as at 30 June 2024

Note

2024

£’000

2023

£’000

Fixed assets

Investments at fair value through profit or loss 8 165,925 159,134

Current assets

Debtors 10 79 67

Cash at bank and in hand 9,722 12,444

9,801 12,511

Creditors: amounts falling due within one year 11 (1,182) (498)

Net current assets 8,619 12,013

Total assets less current liabilities 174,544 171,147

Capital and reserves

Called up share capital 13 4,555 4,555

Share premium account 19,550 19,550

Non-distributable reserve 841 841

Capital redemption reserve 9,628 9,628

Retained earnings – capital reserve 149,973 145,848

Retained earnings – revenue reserve (10,003) (9,275)

Total shareholders’ funds 174,544 171,147

Net asset value per Ordinary share (pence) 14 1,471.4p 1,431.9p

The Financial Statements on pages 76 to 92 were approved by the Board of Directors and signed on

its behalf on 20 September 2024.

Stephen White

Chairman

Company Registration Number 02781968

Statement of Financial Position

The Notes on pages 81 to 92 form part of these Financial Statements.

Job No: 52458 Proof Event: 30 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

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78 Annual Report and Financial Statements 2024

Brown Advisory US Smaller Companies plc

Statement of Changes in Equity

for the year ended 30 June 2024

Note

Called up

Capital

£’000

Premium

£’000

Non-

distributable

Reserve

£’000

Capital

Redemption

Reserve

£’000

Capital

Reserve

†

£’000

Revenue

Reserve*

†

£’000

Total

£’000

1 July 2023 4,555 19,550 841 9,628 145,848 (9,275) 171,147

Repurchase of Ordinary

shares to be held in

treasury 13 – – – – (1,199) – (1,199)

Net return for the year – – – – 5,324 (728) 4,596

Balance at 30 June 2024 4,555 19,550 841 9,628 149,973 (10,003) 174,544

for the year ended 30 June 2023

Note

Called up

Capital

£’000

Premium

£’000

Non-

distributable

Reserve

£’000

Capital

Redemption

Reserve

£’000

Capital

reserve

£’000

Revenue

reserve*

£’000

Total

£’000

1 July 2022 4,555 19,550 841 9,628 129,726 (8,460) 155,840

Net return for the year – – – – 16,122 (815) 15,307

Balance at 30 June 2023 4,555 19,550 841 9,628 145,848 (9,275) 171,147

* Dividends are only payable from the revenue reserve element of retained earnings.

†

Retained earnings comprise the total of Capital reserve and Revenue reserve.

The Notes on pages 81 to 92 form part of these Financial Statements.

for the year ended 30 June 2024 79

Job No: 52458 Proof Event: 30 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

Strategic Report Governance Report Financial Statements Company Information

Statement of Cash Flows

The Notes on pages 81 to 92 form part of these Financial Statements.

for the year ended 30 June 2024

Note

2024

£’000

2023

£’000

Cash flows from operating activities

Investment income received (gross) 1,018 869

Deposit interest received 180 111

Investment management fee paid (1,217) (1,149)

Other cash expenses (568) (652)

Net cash outflow from operating activities before taxation and

interest (587) (821)

Taxation 6 (126) 533

Net cash outflow from operating activities (713) (288)

Cash flows from investing activities

Purchases of investments (42,125) (42,203)

Sales of investments 41,380 47,463

Net cash (outflow)/inflow from investing activities (745) 5,260

Cash flows from financing activities

Repurchase of ordinary shares into Treasury (1,199) –

Net cash outflow from financing activities (1,199) –

(Decrease)/increase in cash (2,657) 4,972

Cash and cash equivalents at the start of the year 12,444 8,218

Realised loss on foreign currency (65) (746)

Cash and cash equivalents at end of the year 9,722 12,444

Job No: 52458 Proof Event: 30 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

80 Annual Report and Financial Statements 2024

Brown Advisory US Smaller Companies plc

Reconciliation of net cash outflow from operating activities

Note

2024

£’000

2023

£’000

Net return before finance costs and taxation 4,722 15,017

Gain on investments (5,391) (16,474)

Realised loss on foreign currency 65 746

(Increase) in debtors 10 (12) (6)

Increase/(decrease) in other creditors and accruals 11 29 (104)

Net cash outflow from operating activities before interest and

taxation (587) (821)

Analysis of changes in net debt

At 30 June

2023

£’000

Cash Flow

£’000

Non-cash

movements

At 30 June

2024

£’000

Cash at bank 12,444 (2,657) (65) 9,722

12,444 (2,657) (65) 9,722

Statement of Cash flows continued

The Notes on pages 81 to 92 form part of these Financial Statements.

for the year ended 30 June 2024 81

Job No: 52458 Proof Event: 30 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

Strategic Report Governance Report Financial Statements Company Information

Notes to the Financial Statements for the

year ended 30 June 2024

1. General information

Brown Advisory US Smaller

Companies PLC (a public

company limited by shares)

is an investment company

incorporated in the United

Kingdom with a premium listing

on the London Stock Exchange.

The Company registration

number is 02781968 and the

registered office is 6th floor, 125

London Wall, London, EC2Y 5AS.

The Company conducts its

affairs so as to qualify as an

investment trust under the

provisions of section 1158 of

the Corporation Tax Act 2010.

The Company has qualified

as an investment trust in

respect of all relevant years

up to and including the year

ended 30 June 2024. Section

1158 was amended to allow the

Company to seek approval of

compliance in advance and for

all subsequent financial years.

The Company received such

advance approval subject to it

continuing to meet the relevant

eligible conditions and ongoing

requirements. The Company

intends to conduct its affairs so

as to enable it to comply with the

requirements. Such approval

exempts the Company from

UK corporation tax on gains

realised in the relevant year

on its portfolio of fixed asset

investments.

A summary of the accounting

policies, all of which have been

applied consistently throughout

the period is set out below.

2. Accounting policies

(a) Basis of preparation

The Financial Statements

for the year ended 30

June 2024 have been

prepared in accordance

with UK Generally Accepted

Accounting Practice (UK

GAAP) including Financial

Reporting Standard 102

(FRS 102), the financial

reporting standard

applicable in the UK and

Republic of Ireland and

with the Statement of

Recommended Practice

(SORP) for Investment Trust

Companies and Venture

Capital Trusts issued by the

Association of Investment

Companies (AIC) in July

2022.

The Company continues

to adopt the going concern

basis in the preparation of

the Financial Statements.

The Financial Statements

have been prepared in

accordance with the

Company’s accounting

policies as set out below.

They are presented in

accordance with the

Companies Act 2006 (the

‘Act’) and the requirements

of the SORP ‘Financial

Statements of Investment

Trust Companies and

Venture Capital Trusts’

issued in July 2022.

In accordance with FRS 102,

the Company is required

to identify its functional

reporting currency in which

the Company predominantly

operates. Having regard

to the Company’s share

capital and the predominant

currency in which its

shareholders operate,

pounds sterling, is the

identified functional and

presentation reporting

currency of the Company.

The Directors are of the

opinion that the Company is

engaged in a single segment

of business activity, being

investment business.

Consequently, no business

segmental reporting is

required.

Statement of Compliance

The Financial Statements

of the Company have been

prepared in compliance with

United Kingdom Accounting

Standards, including FRS

102 and the Companies Act

2006.

(b) Principal accounting

policies

(i) Financial instruments

Financial instruments include

fixed asset investments

and derivative assets and

liabilities.

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82 Annual Report and Financial Statements 2024

Brown Advisory US Smaller Companies plc

2. Accounting policies

(continued)

Accounting standards

recognise a hierarchy of fair

value measurements for

financial instruments which

gives the highest priority to

unadjusted quoted prices in

active markets for identical

assets or liabilities (level 1)

and the lowest priority to

unobservable inputs (level 3).

The classification of financial

instruments depends on the

lowest significant applicable

input, as follows:

Level 1 – Unadjusted, fully

accessible and current quoted

prices in active markets for

identical assets or liabilities.

Included within this category

are investments listed on any

recognised stock exchange.

Level 2 – Quoted prices for

similar assets or liabilities,

or other directly or indirectly

observable inputs which exist

for the duration of the period of

investment. Examples of such

instruments would be those for

which the quoted price has been

recently suspended, forward

exchange contracts and certain

other derivative instruments.

Level 3 – External inputs are

unobservable.

Fair value is the Directors’ best

estimate, based on advice from

relevant knowledgeable experts,

use of recognised valuation

techniques and on assumptions

as to what inputs other market

participants would apply in

pricing the same or similar

instruments. Included within

this category are unquoted

investments.

(ii) Fixed asset investments

As an investment trust, the

Company measures its fixed

asset investments at “fair

value through profit or loss”

and treats all transactions

on the realisation and

revaluation of investments as

transactions on the capital

account. Purchases are

recognised on the relevant

trade date, inclusive of

expenses which are incidental

to their acquisition. Sales

are also recognised on the

trade date, after deducting

expenses incidental to the

sales.

Quoted investments are valued

at bid value at the close of

business on the relevant date

on the exchange on which the

investment is quoted.

(iii) Foreign currency

Monetary assets, monetary

liabilities and equity

investments denominated

in a foreign currency are

expressed in sterling at

rates of exchange ruling at

the Statement of Financial

Position date. Purchases

and sales of investment

securities, dividend income,

interest income and

expenses are translated

at the rates of exchange

prevailing at the respective

dates of such transactions.

Foreign exchange profits

and losses on fixed asset

investments are included

within the changes in fair

value in the capital account.

Foreign exchange profits and

losses on other currency

balances are separately

credited or charged to the

capital account except where

they relate to revenue items

when they are credited or

charged to the revenue

account.

(iv) Income

Income from equity shares

is brought into the revenue

account (except where, in the

opinion of the Directors, its

nature indicates it should be

recognised within the capital

account) on the ex-dividend

date or, where no ex-dividend

date is quoted, when the

Company’s right to receive

payment is established.

Dividends from overseas

companies are shown gross

of withholding tax.

Where the Company

has elected to receive its

dividends in the form of

additional shares rather than

in cash (scrip dividends), the

amount of the cash dividend

foregone is recognised as

income. Any excess in the

value of the shares received

Notes to the Financial Statements continued

for the year ended 30 June 2024 83

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Strategic Report Governance Report Financial Statements Company Information

over the amount of the

cash dividend foregone is

recognised in the capital

account.

(v) Expenses, including

finance charges

Expenses are charged to

the revenue account of the

Income Statement, except as

noted below:

– expenses incidental to the

acquisition or disposal of

fixed asset investments

are included within the

cost of the investments or

deducted from the disposal

proceeds of investments

and are thus charged to

the capital element of

retained earnings – arising

on investments sold via the

capital account; and

– all expenses are accounted

for on an accruals basis.

Finance charges are

accrued using the effective

interest rate method.

(vi) Taxation

Withholding tax deducted at

source from income received

is treated as part of the

taxation charge in the income

account, in instances where it

cannot be recovered.

Deferred tax is provided in

accordance with FRS 102, on

an undiscounted basis, on all

timing differences that have

originated but not reversed

by the Statement of Financial

Position date, based on the

tax rates that are expected to

apply in the period when the

liability is settled or the asset

realised.

Deferred tax assets are only

recognised if it is considered

more likely than not that there

will be suitable profits from

which the future reversal of

timing differences can be

deducted.

In line with the

recommendations of the

SORP, the allocation method

used to calculate the tax

relief on expenses charged

to capital is the “marginal”

basis. Under this basis, if

taxable income is capable

of being offset entirely by

expenses charged through

the revenue account, then no

tax relief is transferred to the

capital account.

(vii) Capital redemption

reserve

The nominal value of

Ordinary share capital

purchased and cancelled is

transferred out of called-up

share capital and into the

capital redemption reserve.

Capital redemption reserve is

not available for the payment

of dividends.

(viii) Retained earnings

This consists of the following:

Capital return

The following are accounted

for in this reserve:

 gains and losses on the

realisation of fixed asset

investments;

 increases and decreases in

the valuation of fixed asset

investments held at the year

end;

 realised and unrealised

foreign exchange differences

of a capital nature;

 tax charges associated with

transactions of a capital

nature;

 costs of professional

advice, including related

irrecoverable VAT, relating to

the capital structure of the

Company;

 other capital charges and

credits charged or credited

to this account in accordance

with the above policies; and

 the costs of purchasing

Ordinary share capital.

Revenue return

 the income return or loss

for the year is taken to the

income element of this

reserve.

This element of the retained

earnings reserve may be

used to fund the distribution

of profits to investors via

dividend payments only

when this is in a surplus

position. Currently there is

an accumulated loss and

therefore no distributions can

be paid.

judgements, estimates

and assumptions

The preparation of the

Company’s Financial

Statements on occasion

requires management to

make judgements, estimates

and assumptions that affect

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84 Annual Report and Financial Statements 2024

Brown Advisory US Smaller Companies plc

2. Accounting policies

(continued)

the reported amounts in the

primary financial statements

and the accompanying

disclosures. These

assumptions and estimates

could result in outcomes

that require a material

adjustment to the carrying

amount of assets or liabilities

affected in the current and

future periods, depending on

circumstance.

Management do not

believe that any significant

accounting judgements or

estimates have been applied

to these Financial Statements

other than the allocations

between capital and revenue

shown in Notes 4 and 5.

Notes to the Financial Statements continued

3. Income

2024

£’000

2023

£’000

Investment income

Dividends from United Kingdom companies 45 24

Dividends from overseas companies 973 849

1,018 873

Other income

Deposit interest 180 111

180 111

Total income 1,198 984

4. Management fee

2024 2023

Revenue

Return

£’000

Capital

Return

£’000

Total

£’000

Revenue

Return

£’000

Capital

Return

£’000

Total

£’000

Management fee 1,222 – 1,222 1,172 – 1,172

1,222 – 1,222 1,172 – 1,172

Details of the calculation of the management fee are given in Note 15.

for the year ended 30 June 2024 85

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Strategic Report Governance Report Financial Statements Company Information

5. Other expenses

2024 2023

Revenue

Return

£’000

Capital

Return

£’000

Total

£’000

Revenue

Return

£’000

Capital

Return

£’000

Total

£’000

Directors’ remuneration 169 – 169 151 – 151

Auditor’s remuneration – audit of

the Company Financial Statements 63 – 63 52 – 52

Other expenses 346 2 348 318 2 320

578 2 580 521 2 523

6. Taxation

(a) Analysis of tax charge/(credit) in the year

2024 2023

Revenue

Return

£’000

Capital

Return

£’000

Total

£’000

Revenue

Return

£’000

Capital

Return

£’000

Total

£’000

Overseas tax charge relating to the

current year 126 – 126 106 – 106

Overseas tax (credit) relating to the

prior year – – – – (396) (396)

Total tax (see Note 7b) 126 – 126 106 (396) (290)

(b) Factors affecting current tax charge/(credit) for the year

The tax assessed for the year is lower than (2023: lower) the Company’s applicable rate of corporation

tax of 25.00% (2023: 20.50%). The differences are explained below:

2024 2023

Revenue

Return

£’000

Capital

Return

£’000

Total

£’000

Revenue

Return

£’000

Capital

Return

£’000

Total

£’000

Net return before taxation (602) 5,324 4,722 (709) 15,726 15,017

Corporation tax at 25.00% (2023:

20.50%) (151) 1,331 1,180 (146) 3,224 3,078

Effects of:

Tax free loss on investments – (1,332) (1,332) – (3,224) (3,224)

Non-taxable income received (234) – (234) (162) – (162)

Capital expenses deductible for tax

purposes – 1 1 – – –

Overseas tax relating to the current

year 126 – 126 106 – 106

Overseas tax relating to the prior

year – – – – (396) (396)

Unutilised management expenses

for the year 385 – 385 308 – 308

Total tax charge/(credit) for the

year 126 – 126 106 (396) (290)

Job No: 52458 Proof Event: 30 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

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86 Annual Report and Financial Statements 2024

Brown Advisory US Smaller Companies plc

6. Taxation (continued)

Due to the Company’s status as an investment trust and the intention to continue meeting the

conditions required to obtain approval in the foreseeable future, the Company has not provided

deferred tax on any capital gains and losses arising on the revaluation or disposal of investments.

There is an unrecognised deferred tax asset of £5,841,000 (2023: £5,461,000) which relates to

unutilised excess expenses. The deferred tax asset would only be recovered if the Company were to

generate sufficient profits to utilise these expenses. It is considered too uncertain that this will occur

and therefore, no deferred tax asset has been recognised.

7. Net return/(loss) per Ordinary share

The return per Ordinary share figure is based on the net profit for the year of £4,596,536 (2023: Profit

£15,307,432), and on 11,918,279 (2023: 11,952,159) Ordinary shares, being the weighted average

number of Ordinary shares in issue during the year.

The return per Ordinary share figure detailed above can be further analysed between revenue and

capital, as below.

2024

£’000

2023

£’000

Net revenue loss (728) (815)

Net capital return 5,324 16,122

Net total return 4,596 15,307

Weighted average number of Ordinary shares in issue during the year 11,918,279 11,952,159

Revenue loss per Ordinary share (6.11)p (6.82p)

Capital return per Ordinary share 44.68p 134.89p

Total return per Ordinary share 38.57p 128.07p

Notes to the Financial Statements continued

for the year ended 30 June 2024 87

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Strategic Report Governance Report Financial Statements Company Information

8. Investments held as at fair value through profit or loss

(a) Portfolio investments

2024

£’000

2023

£’000

Valuation at beginning of year 159,134 147,856

Investment holding losses at beginning of year 2,809 17,962

Cost at beginning of year 161,943 165,818

Purchases at cost 42,780 42,267

Sales at cost (44,781) (46,142)

Cost at end of year 159,942 161,943

Investment holding gains/(losses) at end of year 5,983 (2,809)

Valuation at end of year 165,925 159,134

Investments listed overseas included above 165,925 159,134

(b) Gains on investments

2024

£’000

2023

£’000

Net (loss)/gain on sale of investments (3,401) 1,321

Movement in investment holding gains 8,792 15,153

Gains on investments 5,391 16,474

9. Transaction costs

During the year expenses were incurred in acquiring or disposing of investments classified as fair value

through profit or loss. These have been expensed through capital and are included within gains (2023:

gains) on investments in the Income Statement. The total costs were as follows:

2024

£’000

2023

£’000

Purchases 32 44

Sales 34 29

Total 66 73

Job No: 52458 Proof Event: 30 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

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88 Annual Report and Financial Statements 2024

Brown Advisory US Smaller Companies plc

10. Debtors

2024

£’000

2023

£’000

Prepayments and accrued income 22 10

Dividends receivable 57 57

79 67

11. Creditors: amounts falling due within one year

2024

£’000

2023

£’000

Management fee 303 298

Other creditors and accruals 123 98

Purchases awaiting settlement 756 102

1,182 498

Notes to the Financial Statements continued

12. Financial instruments

Background

The Company’s financial instruments comprise securities and other investments, cash balances and

term loans, debtors and creditors that arise directly from its operations, for example, in respect of sales

and purchases of investments awaiting settlement and debtors for accrued income. The numerical

disclosures below exclude short-term debtors and creditors which are denominated in sterling and do not

incur interest and therefore are not subject to foreign currency risk or interest rate risk.

The principal risks the Company faces in its portfolio management activities are:

 foreign currency risk

 market price risk

 interest rate risk

 liquidity risk

 credit and counterparty risk

The Portfolio Manager’s policies for managing these risks are summarised below and have been applied

throughout the year.

(a) Foreign currency risk

A substantial portion of the financial assets of the Company are denominated in US Dollars with the

result that the Statement of Financial Position and Income Statement can be significantly affected by

currency movements.

The Company normally takes account of this risk when making investment decisions although it could

hedge against foreign currency movements affecting the value of the investment portfolio where

adverse movements are anticipated.

for the year ended 30 June 2024 89

Job No: 52458 Proof Event: 30 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

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Strategic Report Governance Report Financial Statements Company Information

12. Financial instruments (continued)

Foreign currency sensitivity

The principal currency to which the Company was exposed during the year was the US Dollar as all

investments are quoted in that currency. The exchange rates applying against sterling at 30 June and

the average rates during the year ended 30 June were as follows:

2024 2023

30 June

Average

for the year

30 June

Average

for the year

US Dollar 1.2641 1.2594 1.2714 1.2041

1.2641 1.2594 1.2714 1.2041

The following tables illustrate the sensitivity of the profit after tax for the year and net assets to

exchange rates for sterling against the US Dollar. It assumes the following changes in exchange rates:

£/US Dollar +/– 5% (2023: +/– 10%)

These percentages have been determined based on market volatility in exchange rates over the

previous twelve months. The sensitivity analysis is based on the company’s foreign currency financial

instruments held at the date of each Statement of Financial Position.

If sterling had weakened by 5% (2023: 10%) against the currencies this would have had the following

effect on revenue, capital, total return and, accordingly, net assets:

2024 2023

Impact on

revenue

return

£’000

Impact on

capital

return

£’000

Total

£’000

Impact on

revenue

return

£’000

Impact on

capital

return

£’000

Total

£’000

US Dollar (58) 8,296 8,238 (111) 15,913 15,802

(58) 8,296 8,238 (111) 15,913 15,802

If sterling had strengthened by 5% (2023: 10%) against the currencies below this would have had the

following effect:

2024 2023

Impact on

revenue

return

£’000

Impact on

capital

return

£’000

Total

£’000

Impact on

revenue

return

£’000

Impact on

capital

return

£’000

Total

£’000

US Dollar 58 (8,296) (8,238) 111 (15,913) (15,802 )

58 (8,296) (8,238) 111 (15,913) (15,802)

(b) Market price risk

By the very nature of its activities, the Company’s investments are exposed to market price

fluctuations.

The board reviews and agrees policies for managing this risk. The investment adviser assesses the

exposure to market price risk when making each investment decision, and monitors the overall level of

market price risk on the whole of the investment portfolio on an ongoing basis. Further information on

the investment portfolio and investment policy is set out in the Portfolio Manager’s Review on page 4.

Other price risk sensitivity

The following illustrates the sensitivity of the profit after taxation for the year and the total equity to

an increase or decrease of 20% (2023: 20%) in the fair value of the Company’s equities. This level of

change is considered to be reasonably possible based on observation of market conditions during the

Job No: 52458 Proof Event: 30 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

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90 Annual Report and Financial Statements 2024

Brown Advisory US Smaller Companies plc

12. Financial instruments (continued)

year. The sensitivity analysis is based on the Company’s equities at each reporting date, with all other

variables held constant.

The impact of a 20% increase in the value of investments on the revenue loss for the year to 30

June 2024 is a decrease of £232,000 (2023: £223,000) and on the capital return is an increase of

£33,185,000 (2023: £31,827,000).

The impact of a 20% fall in the value of investments on the revenue loss for the year to 30 June 2024

is an increase of £232,000 (2023: £223,000) and on the capital return is a decrease of £33,185,000

(2023: £31,827,000).

Interest rate movements may affect:

 the fair value of investments of fixed interest securities,

 the level of income receivable from any floating interest-bearing securities and cash at bank and on

deposit, and

 the interest payable on floating interest term loans.

 The financial assets (excluding short-term debtors) consist of:

2024 2023

Cash flow

interest

rate risk

£’000

interest

rate risk

£’000

Total

£’000

Cash flow

interest

rate risk

£’000

interest

rate risk

£’000

Total

£’000

GBP 2,853 – 2,853 – – –

US Dollar 6,869 – 6,869 12,444 – 12,444

9,722 – 9,722 12,444 – 12,444

The floating interest rate risk assets consist of cash deposits at call.

The financial liabilities consist of:

2024 2023

Fixed rate

£’000

Non-interest

bearing

£’000

Total

£’000

Fixed rate

£’000

Non-interest

bearing

£’000

Total

£’000

US Dollar – 426 426 – 102 102

GBP – 756 756 – 396 396

– 1,182 1,182 – 498 498

(d) Liquidity risk

Liquidity risk is not considered significant. All liabilities are payable within three months. The Company’s

assets comprise mainly readily realisable securities which can be sold to meet funding requirements if

necessary.

(e) Credit and counterparty risk

Credit risk is the exposure to loss from the failure of a counterparty to deliver securities or cash for

acquisitions or disposals of investments or to repay deposits. The Company manages credit risk by

using brokers from a database of approved brokers who have undergone due diligence tests by by the

Portfolio Manager’s Best Execution Committee and by dealing through JPMCB with banks authorised by

Notes to the Financial Statements continued

for the year ended 30 June 2024 91

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Strategic Report Governance Report Financial Statements Company Information

12. Financial instruments (continued)

the Financial Conduct Authority. Any derivative positions are marked to market and exposure to

counterparties is monitored on a daily basis by the Portfolio Manager; the Board reviews it on a quarterly

basis. The maximum exposure to credit risk at 30 June 2024 was £9,801,000 (2023: £12,511,000).

The calculation is based on the Company’s credit exposure as at 30 June 2024 and may not be

representative of the year as a whole.

(f) Fair value of financial assets and financial liabilities

The financial assets and financial liabilities are carried in the Statement of Financial Position at their fair

value or the statement amount is a reasonable approximation of fair value (due from brokers, dividends

and interest receivable, due to brokers, accruals and cash at bank).

Fair Value hierarchy

FRS102 – section 34.22 on Financial Instruments requires an entity to classify fair value measurements

using fair value hierarchy that reflects the significance of the inputs used in making the measurements.

The fair value hierarchy shall have the following levels:

Level 1 reflects financial instruments quoted in an active market.

Level 2 reflects financial instruments whose fair value is evidenced by comparison with other

observable current market transactions in the same instrument or based on a valuation technique

whose variables includes only data from observable markets.

Level 3 reflects financial instruments whose fair value is determined in whole or in part using a valuation

technique based on assumptions that are not supported by prices from observable market transactions

in the instrument and not based on available observable market data. The financial assets measured at

fair value in the Statement of Financial Position are grouped into the fair value hierarchy as follows

2024 2023

Level 1

£’000

Level 2

£’000

Level 3

£’000

Total

£’000

Level 1

£’000

Level 2

£’000

Level 3

£’000

Total

£’000

Investments 165,925 – – 165,925 159,134 – – 159,134

(g) Use of derivatives

In order to enhance returns, the Company may take short positions (using contracts for difference) in

respect of a small number of larger capital securities. There were no derivative positions held at the

year end (2023: nil).

13. Paid-up share capital

2024 2023

Number £’000 Number £’000

Ordinary shares of 25p each

Balance brought forward 11,952,159 2,987 11,952,159 2,987

Ordinary shares repurchased into Treasury (90,000) (23) – –

Closing balance of Ordinary shares 11,862,159 2,964 11,952,159 2,987

Treasury shares

Balance brought forward 6,271,254 1,568 6,271,254 1,568

Repurchase of Ordinary shares into Treasury 90,000 23 – –

Closing balance of Ordinary shares held in

Treasury 6,361,254 1,591 6,271,254 1,568

Total 4,555 4,555

Job No: 52458 Proof Event: 30 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

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92 Annual Report and Financial Statements 2024

Brown Advisory US Smaller Companies plc

14. Net asset value per

Ordinary share

The net asset value per Ordinary

share is based on the net

assets attributable to the equity

shareholders of £174,544,000

(2023: £171,147,000) and on

11,862,159 (2023: 11,952,159)

Ordinary shares, being the

number of Ordinary shares in

issue at the year end.

15. Related parties and

transactions with the

Portfolio Manager and the

AIFM

Directors

There are no transactions

with the Directors other than

aggregated remuneration

for services as Directors as

disclosed in the Directors’

Remuneration Report on

page 61 and as set out in Note

5 to the Financial Statements

on page 85 and the beneficial

interests of the Directors in the

Ordinary shares of the Company

as disclosed on page 62.

Transactions with the Portfolio

Manager and the AIFM

FundRock Partners Limited is

AIFM to the Company pursuant

to an Alternative Investment

Fund Management Agreement

between FundRock Partners

Limited and the Company.

FundRock Partners Limited has

also been appointed to provide

company secretarial services to

the Company.

Brown Advisory is appointed to

provide portfolio management

services pursuant to a Portfolio

Management Agreement

between the Company,

FundRock Partners Limited and

Brown Advisory.

The management fee is

calculated at an annual rate of

0.7% on the first £200 million;

0.6% of the next £300 million;

and 0.5% thereafter of the

Company’s adjusted net assets.

The management fee is payable

by the Company to FundRock

Partners Limited, who shall

deduct from the management

fee the amounts due to it

as AIFM and for company

secretarial services and shall pay

the balance to Brown Advisory.

The management fee is

calculated and payable on a

quarterly basis.

The management fee payable to

FundRock Partners Limited for

the period from 1 July 2023 to

30 June 2024 was £1,222,000

(payable to FundRock Partners

Limited for the period from

1 July 2022 to 30 June 2023:

£1,172,000) with £303,000

outstanding as at 30 June 2024

(2023: £298,000).

The appointment of Brown

Advisory and FundRock Partners

Limited may be terminated by

not less than six months’ notice.

16. Contingent liabilities and

capital commitments

There were no contingent

liabilities or capital

commitments outstanding at

30 June 2024 (2023: nil).

Notes to the Financial Statements continued

Job No: 52458 Proof Event: 30 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

Company Information

Strategic Report Governance Report Company InformationFinancial Statements

for the year ended 30 June 2024 93

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94 Annual Report and Financial Statements 2024

Brown Advisory US Smaller Companies plc

Glossary of Terms including Alternative

Performance Measures

Alternative performance

measures

The European Securities and

Markets Authority (ESMA)

published its guidelines on

Alternative Performance

Measures (APMs). APMs are

defined as being a ‘financial

measure of historical or future

financial performance, financial

position, or cash flows, other

than a financial measure defined

or specified in the applicable

accounting framework.’

The guidelines are aimed at

promoting the usefulness

and transparency of APMs

included in regulated

information and aim to improve

comparability, reliability and/

or comprehensibility of APMs.

The following APMs are used

throughout the Annual Report,

Financial Statements and Notes

to the Financial Statements.

Benchmark total return index

A total return index is a type of

equity performance index that

tracks both the capital gains

of a group of stocks over time,

and assumes that any cash

distributions, such as dividends,

are reinvested back into the

index.

Discount*

The amount, expressed as a

percentage, by which the share

price is less than the net asset

value per share.

At 30 June 2024 the share price

was 1,282.50p and the net asset

value per share (cum income)

was 1,471.4p, the discount

therefore being 12.8%.

Discount management

Discount management is the

process of the buy-back and

issue of company shares by

the company, to and from its

own holding or ‘Treasury’ with

the intention of managing any

imbalance between supply and

demand for the company’s

shares and thereby the market

price. The aim is to ensure that,

in normal market conditions,

the market price of a company’s

shares will not materially vary

from its NAV per share. The

authority to repurchase a

company’s shares is voted

upon by the shareholders of a

company at each annual general

meeting.

Gearing*

Gearing is the borrowing of

cash to buy more assets for

the portfolio with the aim of

making a gain on those assets

larger than the cost of the loan.

However, if the portfolio does

not perform well, the gain might

not cover the costs. The more

an investment company gears,

the higher the risk.

Gearing is defined as the ratio of

a company’s debt less cash held,

where debt exceeds cash,

compared to its net assets,

expressed as a percentage.

Mid-market price

The mid-market price is the mid-

point between the buy and the

sell prices.

NAV per share

The net asset value (‘NAV’)

is the value of the investment

company’s assets less its

liabilities. The NAV per share is

the NAV divided by the number

of shares in issue. The difference

between the NAV per share

and the share price is known

as the discount or premium.

As at 30 June 2024, the net

asset value per share was

1,471.4p.

* Alternative performance measure.

for the year ended 30 June 2024 95

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Strategic Report Governance Report Company InformationFinancial Statements

Ongoing charges*

Ongoing charges are the total expenses including both the portfolio management fee and other costs,

but excluding finance costs (if applicable), as a percentage of the average NAV over the financial year.

The calculation of the ongoing charges is provided below.

2024

£’000

2023

£’000

Management fee 1,222 1,172

Other expenses 578 521

Total expenses (excluding finance costs) 1,800 1,693

Average net assets 171,122 168,902

Ongoing charges % 1.05 1.00

Premium*

The amount, expressed as a

percentage, by which the share

price is more than the net asset

value per share.

PRIIPS Key Information

Documents

Since 1 January 2018 there

has been a requirement of

the Packaged Retail and

Insurance – based Investment

Products (PRIIPs) to provide

investors with a Key Information

Document (KID) which includes

performance projections which

are the product of prescribed

calculations based on the

Company’s past performance.

The content and format of the

KID cannot be amended under

the applicable EU regulations.

The AIC has stated that these

documents are potentially

misleading for shareholders

and since 1 January 2023,

preparers of the PRIIPs and

KIDs have been required to

publish a KID in accordance

with updated rules. These were

introduced by the FCA as set

out in PS22/2: PRIIPs – Final

scope rules and amendments

and changes made to the

Regulatory Technical Standards

(RTS). The Board is strongly of

the view that these projections

are not an appropriate or helpful

way to assess the Company’s

future prospects. Accordingly,

the Board urges shareholders

to consider the more complete

information set out in both the

Company’s half yearly financial

report and Annual Report and

Financial Statements, together

with the monthly factsheets,

and daily NAV announcements,

when considering an investment

in the Company’s shares. These

documents are available on the

Company website at:

www.brownadvisory.com/basc

Treasury shares

Treasury shares are the part

of the issued share capital

that is held by the Company.

They do not rank for dividends

and do not have voting

rights. The Company uses

Treasury shares for discount

management purposes as

described above and in more

detail in the Strategic Report

on page 33 and in the Report

of the Directors ‘Repurchase of

Shares’ on page 45.

* Alternative performance measure.

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96 Annual Report and Financial Statements 2024

Brown Advisory US Smaller Companies plc

Notice of Annual General Meeting

This Notice of Meeting is an

important document. If you

are in any doubt as to what

action to take, you should

consult an appropriate

independent adviser.

Notice is hereby given that

the Annual General Meeting

of Brown Advisory US Smaller

Companies PLC will be held at

the offices of Brown Advisory

LLC, 18 Hanover Square,

London W1S 1JY on Monday,

4 November 2024 at 2:00 p.m.

for the following purposes:

Ordinary Business

To consider and, if thought fit,

pass the following as Ordinary

Resolutions:

1. That the Report of the

Directors and the audited

Financial Statements of the

Company for the year ended

30 June 2024 be received

and adopted.

2. That the Directors’

Remuneration Report for the

year ended 30 June 2024 be

approved.

3. That Ms R Beechey be

elected as a Director of the

Company.

4. That Mr J Judd be re-elected

as a Director of the Company.

5. That Ms J Routledge be

re-elected as a Director of

the Company.

6. That Mr S White be re-

elected as a Director of the

Company.

7. That Haysmacintyre be re-

appointed as Auditor of the

Company.

8. That the Directors be

authorised to agree the

remuneration of the Auditor.

Special Business

To consider, and if thought fit, to

pass Resolution 9 as an Ordinary

Resolution and Resolutions 10 to

12 as Special Resolutions:

Ordinary Resolutions:

9. That the Directors of the

Company be and are hereby

generally and unconditionally

authorised for the purposes

of Section 551 of the

Companies Act 2006

(‘the Act’), in substitution

for and to the exclusion of

any outstanding authority

previously conferred on the

Directors under Section 551

of the Act, to allot shares in

the capital of the Company

(‘shares’) up to a maximum

aggregate nominal

amount of approximately

£296,553 (being 10% of the

Company’s issued share

capital (excluding Treasury

shares)) provided that this

authority shall expire at the

conclusion of the Annual

General Meeting of the

Company to be held in 2025

save that the Company

may, before such expiry,

make an offer or agreement

which would or might

require shares to be allotted

after such expiry and the

Directors may allot shares in

pursuance of such an offer or

agreement as if the authority

hereby conferred had not

expired.

Special Resolutions:

10. That the Directors of the

Company be and are hereby

granted power pursuant to

Section 570 and/or Section

573 of the Companies Act

2006 (‘the Act’) to allot

equity securities (within the

meaning of Section 560

of the Act) for cash either

pursuant to the authority

conferred by Resolution 9 or

by way of a sale of Treasury

shares, as if Section 561 of

the Act did not apply to any

such allotment, provided that

this power shall be limited to:

(a) the allotment of equity

securities up to an

aggregate nominal

amount of £296,553

(being 10% of the

Company’s issued

share capital (excluding

Treasury shares)); and

for the year ended 30 June 2024 97

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Strategic Report Governance Report Company InformationFinancial Statements

(b) in addition to the

authority referred to in

(a) above, in connection

with an offer of equity

securities by way of a

rights issue or open offer

to Ordinary shareholders

in proportion as nearly

as may be practicable

to their existing holdings

subject to such limits

or restrictions or

other arrangements

as the Directors may

deem necessary or

expedient to deal with

any Treasury shares,

fractional entitlements

or securities represented

by depositary receipts,

record dates, legal,

regulatory or practical

problems in, or under

the laws or requirements

of, any territory or the

requirements of any

regulatory body or stock

exchange or any other

matter, and provided

that this authority shall

expire at the conclusion

of the Annual General

Meeting of the Company

to be held in 2025 save

that the Company

may, before such

expiry, make an offer

or agreement which

would or might require

equity securities to be

allotted after such expiry

and the Directors may

allot equity securities in

pursuance of such an

offer or agreement as

if the authority hereby

conferred had not

expired.

11. That the Company be and is

generally and unconditionally

authorised in accordance

with Section 701 of the

Companies Act 2006 (the

‘Act’) to make one or more

market purchases (within the

meaning of Section 693 of

the Act) of Ordinary shares

provided that:

(a) the maximum number

of shares that may be

purchased is 1,778,137

Ordinary shares, being

14.99% of the issued

number of shares

(excluding Treasury

shares) at the date of

this document or, if

lower, such number

as is equal to 14.99%

of the issued number

of shares (excluding

Treasury shares) at

the date of passing the

resolution;

(b) the minimum price

which may be paid

shall be each of their

respective nominal

values;

(excluding the expenses

of such purchase) which

may be paid for each

Ordinary share is the

higher of:

(i) 105% of the average

middle market

quotations for such

Ordinary share taken

from the London Stock

Exchange Daily Official

List for the five business

days immediately

preceding the day on

which such share is

purchased; and

(ii) the higher of the

price of the last

independent trade and

the highest current

independent bid as

stipulated by Article

5(1) of Commission

Regulation EC 22

December 2003

implementing the

Market Abuse

Directive as regards

exemptions for buy-

back programmes and

stabilisation of financial

instruments (No.

2273/2003); and

(d) unless renewed, this

authority shall expire

at the conclusion

of the next Annual

General Meeting of the

Company to be held

in 2025 save that the

Company may, prior to

such expiry, enter into

a contract to purchase

shares which will or

may be completed or

executed wholly or

partly after such expiry.

12. That a General Meeting other

than an Annual General

Meeting may be called on

not less than 14 clear days’

notice.

By Order of the Board

FundRock Partners Limited

Company Secretary

3 October 2024

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98 Annual Report and Financial Statements 2024

Brown Advisory US Smaller Companies plc

Notes for the Annual General Meeting

1. A Member entitled to attend

and vote may appoint a proxy

or proxies to attend, speak

and vote instead of him or

her. A proxy need not be a

member of the Company.

A form of proxy is enclosed

which, if used, must be lodged

at the Company’s Registrars,

Computershare Investor

Services PLC, The Pavilions,

Bridgwater Road, Bristol BS99

6ZY not less than forty-eight

hours before the meeting.

Alternatively you can appoint a

proxy electronically by visiting

www.eproxyappointment.com.

You will be asked to enter

the Control Number, the

Shareholder Reference Number

and PIN which are printed on

the form of proxy or contained

within the email sent to you. To

appoint more than one proxy

you may photocopy this form.

You may appoint a person other

than the Chairman as your

proxy. Please indicate the proxy

holder’s name and the number

of shares in relation to which

they are authorised to act as

your proxy (which, in aggregate,

should not exceed the number

of shares held by you). Please

also indicate if the proxy

instruction is one of multiple

instructions being given. All

forms must be signed and

should be returned together in

the same envelope.

2. Pursuant to Regulation

41 of the Uncertificated

Securities Regulations 2001,

the Company specifies that

to be entitled to attend and

vote at the shareholders AGM

(and for the purpose of the

determination by the Company

of the number of votes they

may cast), Members must be

entered on the Company’s

2:00 p.m. on 31 October 2024.

If the meeting is adjourned

then, to be so entitled,

Members must be entered

on the Company’s Register of

Members at the time which is

48 hours before the time fixed

for the adjourned meeting or,

if the Company gives notice of

the adjourned meeting, at the

time specified in that notice.

3. As at 16 September 2024

(being the latest practicable

date prior to the publication

of this notice) the Company’s

issued share capital was

18,223,413 Ordinary shares

and the total voting rights were

11,862,159.

4. The vote ‘Withheld’ is provided

to enable you to abstain on any

particular resolution. However,

it should be noted that a

‘Withheld’ vote is not a vote in

law and will not be counted in

the calculation of the proportion

of the votes ‘For’ and ‘Against’ a

resolution.

5. The completion and return of

this form will not preclude a

Member from attending the

meeting and voting in person.

6. CREST members who wish

to appoint a proxy or proxies

through the CREST electronic

proxy appointment service

may do so for the Annual

General Meeting to be held

on 4 November 2024 and any

adjournment(s) thereof by using

the procedures described in

the CREST Manual. CREST

Personal Members or other

CREST sponsored members,

and those CREST members

who have appointed a voting

service provider(s), should refer

to their CREST sponsor or voting

service provider(s), who will be

able to take the appropriate

action on their behalf.

7. In order for a proxy

appointment or instruction

made using the CREST service

to be valid, the appropriate

CREST message (a ‘CREST

Proxy Instruction’) must be

properly authenticated in

accordance with CRESTCo’s

specifications and must contain

the information required for

such instructions, as described

in the CREST Manual. The

message, regardless of whether

it constitutes the appointment

of a proxy or an amendment

to the instruction given to a

previously appointed proxy

must, in order to be valid,

be transmitted so as to be

received by the Company’s

agent ID (3RA50) by the latest

time(s) for receipt of proxy

appointments specified in the

Notice of Meeting.

For this purpose, the time

of receipt will be taken to be

the time (as determined by

the timestamp applied to

the message by the CREST

Applications Host) from

which the Company’s agent is

able to retrieve the message

for the year ended 30 June 2024 99

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Strategic Report Governance Report Company InformationFinancial Statements

by enquiry to CREST in the

manner prescribed by CREST.

After this time any change

of instructions to proxies

appointed through CREST

should be communicated to

the appointee through other

means.

CREST members and, where

applicable, their CREST

sponsors or voting service

providers should note that

CRESTCo does not make

available special procedures

in CREST for any particular

messages. Normal system

timings and limitations will

therefore apply in relation

to the input of CREST

Proxy Instructions. It is the

responsibility of the CREST

member concerned to take

(or, if the CREST member is

a CREST personal member

or sponsored member or has

appointed a voting service

provider(s), to procure that

his CREST sponsor or voting

service provider(s) take(s))

such action as shall be

necessary to ensure that a

message is transmitted by

means of the CREST system

by any particular time. In this

connection, CREST members

and, where applicable,

their CREST sponsors or

voting service providers are

referred, in particular, to those

sections of the CREST Manual

concerning practical limitations

of the CREST system and

timings.

The Company may

treat as invalid a CREST

Proxy Instruction in the

circumstances set out in

Regulation 35(5)(a) of the

Uncertificated Securities

Regulations 2001.

Any corporation which is a

Member can appoint one or

more corporate representatives

who may exercise on its

behalf all of its powers as a

Member provided that, if it

is appointing more than one

corporate representative, it

does not do so in relation to the

same shares. It is therefore no

longer necessary to nominate

a designated corporate

representative. Representatives

should bring to the meeting

evidence of their appointment,

including any authority under

which it is signed.

If you are an institutional

investor you may be able to

appoint a proxy electronically

via the Proxymity platform,

a process which has been

agreed by the Company and

approved by the Registrar. For

further information regarding

Proxymity, please go to www.

proxymity.io. Your proxy must

be lodged by 2:00 p.m. on

31 October 2024 in order to

be considered valid. Before

you can appoint a proxy via

this process you will need to

have agreed to Proxymity’s

associated terms and

conditions. It is important that

you read these carefully as

you will be bound by them and

they will govern the electronic

appointment of your proxy.

8. If you have disposed of your

holding in the Company this

document should be passed

on to the person through

whom the sale or transfer was

effected for transmission to the

purchaser or transferee.

9. Any person to whom this

Notice is sent who is a person

nominated under Section 146

of the Companies Act 2006

to enjoy information rights (a

Nominated Person) may, under

an agreement between him/

her and the shareholder by

whom he/she was nominated,

have a right to be appointed

(or to have someone else

appointed) as a proxy for the

Meeting. If a Nominated Person

has no such proxy appointment

right or does not wish to

exercise it, he/she may, under

any such agreement, have a

right to give instructions to the

shareholder as to the exercise

of voting rights.

10. A copy of the Notices of

Meetings and other information

required by section 311A of the

Companies Act 2006, can be

found at www.brownadvisory.

com/basc.

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100 Annual Report and Financial Statements 2024

Brown Advisory US Smaller Companies plc

11. Pursuant to Section 319A of

the Companies Act 2006,

the Company must cause

to be answered at the AGM

any question relating to the

business being dealt with at the

AGM which is put by a Member

attending the Meeting except

in certain circumstances,

including if it is undesirable in

the interests of the Company

or the good order of the

Meeting or if it would involve

the disclosure of confidential

information.

12. Under Sections 338 and 338A

of the 2006 Act, Members

meeting the threshold

requirements in those sections

have the right to require

the Company: (i) to give, to

Members of the Company

entitled to receive notice of the

Meeting, notice of a resolution

which those Members intend to

move (and which may properly

be moved) at the Meeting;

and/or (ii) to include in the

business to be dealt with at the

Meeting any matter (other than

a proposed resolution) which

may properly be included in

the business at the Meeting.

A resolution may properly be

moved, or a matter properly

included in the business unless:

(a) (in the case of a resolution

only) it would, if passed, be

ineffective (whether by reason

of any inconsistency with any

enactment or the Company’s

constitution or otherwise);

(b) it is defamatory of any

person; or (c) it is frivolous or

vexatious. A request made

pursuant to this right may be in

hard copy or electronic form,

must identify the resolution

of which notice is to be given

or the matter to be included

in the business, must be

accompanied by a statement

setting out the grounds for the

request, must be authenticated

by the person(s) making it

and must be received by the

Company not later than the

date that is six clear weeks

before the Meeting, and (in the

case of a matter to be included

in the business only) must be

accompanied by a statement

setting out the grounds for the

request.

13. Under Section 527 of the Act,

shareholders meeting the

threshold requirement set

out in that section have the

right to require the Company

to publish on a website a

statement setting out any

matter relating to:

(i) The audit of the Company’s

Financial Statements

(including the auditor’s

report and the conduct of

the audit) that are to be

laid before the meeting;

or (ii) any circumstances

connected with the auditor

of the Company ceasing

to hold office since the

previous AGM at which

the annual financial

statements and reports

were laid in accordance

with Section 437 of the Act.

The Company may not

require the shareholders

requesting any such

website publication to

cover any costs incurred

in complying with Section

527 or 528 and is required

to forward any statement

placed on a website to the

Company’s auditor not

later than the time when

it makes the statement

on the website.

The business which may be

dealt with at the meeting

includes any statements

that the Company has been

required under Section 527

of the Act to publish on a

website.

14. Shareholders are advised that,

unless otherwise stated, any

telephone number, website

and email address set out in

this Notice of Meeting, Form of

Proxy, or Annual Report should

not be used for the purpose

of serving information on the

Company (including the service

of documents or information

relating to the proceedings

at the Company’s AGM).

Notes for the Annual General Meeting continued

for the year ended 30 June 2024 101

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Investor Information

Performance Updates

The Company publishes a

monthly factsheet which

contains key information about

its performance, investment

portfolio and pricing. The

factsheets, together with

electronic copies of the most

recent full and interim reports

and financial statements, are

available for download from

www.brownadvisory.com/basc.

Should you wish to be added

to an email distribution list for

future editions of the monthly

factsheet, please send an email

to InvestmentTrustEnquiries@

brownadvisory.com. For

investors who do not have

access to the internet, these

documents are also available on

request from Brown Advisory’s

Client Services Team on

+44 (0)20 3301 8130.

Further information about the

Company is also available from

third party websites such as

www.morningstar.co.uk and

www.theaic.co.uk

Retail distribution of non-

mainstream products

The Company currently

conducts its affairs so that its

shares can be recommended by

Independent Financial Advisers

to ordinary retail investors in

accordance with the FCA’s rules

in relation to non-mainstream

investment products and

intends to continue to do so

for the foreseeable future.

The Company’s Ordinary

shares are excluded from

the FCA’s restrictions which

apply to non-mainstream

investment products because

they are Ordinary shares in an

investment trust.

ISA Qualification

The Company currently

manages its affairs so as to be

a qualifying investment trust

under the Individual Savings

Account (‘ISA’) rules. As a result,

under current UK legislation,

the Ordinary shares qualify for

investment via the stocks and

shares component of an ISA up

to the full annual subscription

limit, currently £20,000

(2024/25) in each tax year. It is

the present intention that the

Company will conduct its affairs

so as to continue to qualify for

ISA products.

Dividend Tax Allowance

With effect from 6 April 2016 the

dividend tax credit was replaced

by an annual tax-free dividend

allowance. Dividend income in

excess of this allowance will be

taxed according to your personal

income tax bracket.

The Company’s Registrar will

continue to provide shareholders

with confirmation of dividends

paid; shareholders should retain

such confirmations to enable

them to calculate and report

total dividend income received.

Shareholders should note that

it is their sole responsibility to

report any dividend income in

excess of their annual tax-free

allowance to HMRC.

Further information on changes

to dividend tax allowance can

be obtained from the HMRC

website at: www.gov.uk/tax-on-

dividends

Changes to our Data Privacy

Notice

We have updated our Privacy

Notice to align with the new data

privacy law in the European

Union, known as the General

Data Protection Regulation

(GDPR) to which we are subject.

Data protection and the security

of your information has always

been, and remains, important

to us.

Any information concerning

Shareholders and other related

natural persons (together the

Data Subjects) provided to,

or collected by or on behalf

of, Brown Advisory LLC and/

or FundRock Partners Limited

(the Controllers) (directly from

Data Subjects or from publicly

available sources) may be

processed by the Controllers as

joint controllers, in compliance

with the GDPR.

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102 Annual Report and Financial Statements 2024

Brown Advisory US Smaller Companies plc

You are not required to take any

action in respect of this notice,

but we encourage you to read

our Privacy Notice. Our Privacy

Notice can be found on our

website, www.brownadvisory.

com/basc. In the event that you

hold your shares as a nominee,

we request that you promptly

pass on the details of where to

find our Privacy Notice to the

underlying investors and/or

the beneficial owners.

Managing your account

online

The Company’s registrar,

Computershare Investor

Services PLC, allows you to

manage your shareholding

online. If you are a direct

investor, you can view your

shareholding, change the way

the registrar communicates

with you and buy and sell

shares. If you haven’t used this

service before, you can enter

the name of the Company and

www-uk.computershare.com/

investor.

You’ll need your Investor code

(IVC) printed on your share

certificate in order to register.

Computershare’s contact

details are as follows:

Computershare Investor

Services PLC

The Pavilions Bridgwater Road

BRISTOL BS99 6ZZ

Telephone:

+44 (0)370 889 4089

* Calls to this number are charged at the standard

geographical rate and will vary by provider. Calls

outside the United Kingdom will be charged at

the applicable international rate. Lines are open

from 09:00 a.m. – 17:30 p.m. Monday to Friday.

Investor Information continued

for the year ended 30 June 2024 103

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Strategic Report Governance Report Company InformationFinancial Statements

Important Risk Warnings

Advice to shareholders

In recent years investment

related scams have become

increasingly sophisticated and

difficult to spot. We are therefore

warning all our shareholders

to be cautious so that they can

protect themselves and spot the

warning signs.

Fraudsters will often:

 contact you out of the blue

 apply pressure to invest

quickly

 downplay the risks to your

money

 promise tempting returns

that sound too good to be

true

 say that they are only making

the offer available to you

 ask you to not tell anyone else

about it

You can avoid investment

scams by:

 Rejecting unexpected offers

– Scammers usually cold call

but contact can also come by

email, post, word of mouth

or at a seminar. If you have

been offered an investment

out of the blue, chances are

it’s a high-risk investment or

a scam.

 Checking the FCA Warning

List – Use the FCA Warning

List to check the risks of a

potential investment. You

can also search to see if

the firm is known to be

operating without proper FCA

authorisation.

 Getting impartial advice –

Before investing get impartial

advice and don’t use an

adviser from the firm that

contacted you.

If you are suspicious, report it.

 You can report the firm

or scam to the FCA by

contacting their Consumer

Helpline on 0800 111 6768

or using their online reporting

form.

 If you have lost money in a

scam, contact Action Fraud

on 0300 123 2040 or visit

www.actionfraud.police.uk

For further helpful information

about investment scams and

how to avoid them please visit

www.fca.org.uk/scamsmart

Job No: 52458 Proof Event: 30 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

104 Annual Report and Financial Statements 2024

Brown Advisory US Smaller Companies plc

Company Information

Directors Stephen White, Chairman

Ruth Beechey (from 1 July 2024)

Lisa Booth

Jasper Judd

Clive Parritt (until 30 June 2024)

Jane Routledge

Registered

Office

6th Floor, 125 London Wall,

London EC2Y 5AS

Portfolio

Manager

Brown Advisory LLC

901 South Bond Street,

Suite 400, Baltimore,

Maryland 21231 United States

Alternative

Investment

Fund

Manager

(AIFM)

FundRock Partners Limited

Hamilton Centre, Rodney Way,

Chelmsford, Essex CM1 3BY

Authorised and regulated

by the Financial Conduct

Authority

Company

Secretary

FundRock Partners Limited

Hamilton Centre, Rodney Way,

Chelmsford, Essex CM1 3BY

Registered

Auditor

Haysmacintyre LLP

10 Queen Street Place,

London, EC4R 1AG

Telephone +44 (0)20 3994 7129

Website www.brownadvisory.com/basc

Email InvestmentTrustEnquiries@

brownadvisory.com

Custodian J.P. Morgan Chase Bank N.A

25 Bank Street, Canary Wharf,

London E14 5JP

Depositary J.P.Morgan Europe Limited

25 Bank Street,

Canary Wharf,

London E15 5JP

Registrars Computershare Investor

Services PLC

The Pavilions, Bridgwater

Road, B ristol BS99 6ZZ

Telephone 0370 889 4089

Website www.investorcentre.co.uk

Company

Registration

Number

02781968

Registered in England & Wales

An investment company under

s.833 of the Companies Act

2006

Investor

Codes

The Ordinary shares of the

Company are traded on the

London Stock Exchange.

Sedol

Number

Ordinary

0346340

ISIN

Number

Ordinary

GB0003463402

Ticker

Ordinary

BASC

The Company

is a member of:

Job No: 52458 Proof Event: 19 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

Job No: 52458 Proof Event: 19 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

Brown Advisory US Smaller Companies PLC Annual Report and Financial Statements for the year ended 30 June 2024

Brown Advisory US Smaller Companies PLC

Annual Report and Financial Statements

for the year ended 30 June 2024

Brown Advisory US Smaller Companies PLC

6th Floor

125 London Wall

London EC2Y 5AS

Job No: 52458 Proof Event: 19 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600

Job No: 52458 Proof Event: 19 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA

Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600