Brown Advisory US Smaller Companies PLC Annual Report and Financial Statements for the year ended 30 June 2024
### Brown Advisory US Smaller Companies PLC Brown Advisory US Smaller Companies PLC
6th Floor
### Annual Report and Financial Statements
125 London Wall
### for the year ended 30 June 2024
London EC2Y 5AS
Job No: 52458 Proof Event: 19 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA 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 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 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 Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
Strategic Report

Governance

Financial Statements

Company Information

# Contents

## Strategic Report

|  Introduction to Brown Advisory US Smaller Companies PLC | 2 | Chairman's Statement | 7  |
| --- | --- | --- | --- |
|  Investment Objective, Investment Policy and Benchmark Index | 4 | Portfolio Manager's Review | 14  |
|  Financial Highlights | 6 | Twenty Largest Holdings | 18  |
|   |  | List of Investments | 23  |
|   |  | Strategic Report | 32  |

![img-0.jpeg](img-0.jpeg)

## 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  |

![img-1.jpeg](img-1.jpeg)

## 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  |

![img-2.jpeg](img-2.jpeg)

## Company Information

|  Glossary of Terms (including Alternative Performance Measures) | 94 | Investor Information | 101  |
| --- | --- | --- | --- |
|  Notice of Annual General Meeting | 96 | Important Risk Warnings | 103  |
|  Notes for the Annual General Meeting | 98 | Company Information | 104  |

![img-3.jpeg](img-3.jpeg)

for the year ended 30 June 2024 1
Brown Advisory US Smaller Companies plc
## Introduction to Brown Advisory US Smaller
## Companies PLC
What Does Brown Advisory US
GROWTH
Smaller Companies PLC (the
“Company”) Do?
The Company aims to achieve long-term 10-year rolling return
31 Dec 1935 to 31 Dec 2023
capital growth by investing in a diversified
portfolio of quoted US smaller and Opportunity
225 – Durability
medium-sized companies.

|  | 208 | – Large and/or growing |
| --- | --- | --- |
| The portfolio management team, Brown |  | market |
| Advisory’s Christopher Berrier and |  | – Market leader or share |

171
gainer
George Sakellaris, CFA, takes a rigorous
– Differentiated business
and disciplined approach to investing, 150%
model
emphasising long-term, risk-adjusted
returns.
100%
GOVERNANCE
Why Invest?
The Company offers a cost-effective way
50%
to access the large, entrepreneurial group
of small-cap companies in the US, the
Execution
world’s largest economy. 0%
– Trust & transparency
Small-caps Mid-caps Large-caps
Small-cap companies span a wide range – Capable, shareholder-
friendly
of sectors and industries, unlike the
® Index,
– Diverse and appropriate
® Index,
relatively narrow large-cap market that
Board structure
is dominated by a few giants. Investing ® Index.
– Well-structured, aligned
in these smaller companies offers early incentives
US Small-Caps: Opportunity and
access to the successful businesses that
On a Rolling 10-Year Basis, the have the potential to become large-cap Selection
GO-TO MARKET
average Small-Cap Return is companies in the future. Brown Advisory sees the US small and
Superior mid-sized company sector as diverse
US small-cap companies are often – and
and dynamic, offering long-term capital
Brown Advisory believes mistakenly –
growth opportunities. With many
underrepresented in many investors’
250% companies to choose from, selection is
portfolios but can provide diversification
Economic profit
crucial.
and deliver positive returns over the long
– Higher Return on
term. Against this backdrop, the Company Investment Capital
200% (ROIC)
has endorsed Christopher and George’s
– Highly valuable
investment style, focusing on high-
incremental revenue
quality, well-managed small-cap – High and/or rising
businesses with the potential to grow into margins and returns
– Capital efficient
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.
Source: Furey Research Partners; as of 31/12/2023 and is the
most recent data available.
2 Annual Report and Financial Statements 2024
Indices used include: Large-Caps – S&P500
Mid-Caps – Russell MidCap
Small-Caps – Russell 2000,
Micro-Cap – Russell Microcap
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Strategic Report Governance Company Information Financial Statements
Key Benefits of Active US Small- Advisory’s extensive research capabilities
Cap Investing with a large team analysing the entire
US market. The firm also leverages a
Skilled, active small-cap managers can
broad network of venture capital, private
outperform the broader equity markets
US small-caps are
equity and corporate relationships.
by using their experience, their deep
often – and we
Understanding the full spectrum of
research and their consistent investment
private and public companies is key to believe mistakenly
processes across various market
grasping the competitive landscape – overlooked but
environments. Key attractions include:
## and identifying companies that may “
have the potential
• Growth potential – younger, faster
float in the future. Brown Advisory’s
growing companies earlier in their life to meaningfully
disciplined research, teamwork, and
cycle. enhance long-
client-first culture help drive long-term
• Sector/Industry breadth – wide array outperformance for clients, making it a term returns for
of sectors and industries compared to compelling portfolio manager.
patient investors.
large-caps.
Investment Philosophy
• Under-researched – less analyst
The portfolio management team’s ‘3G’
coverage contributes to mispricing and
model focuses on durable growth, sound
opportunities.
governance, and scalable go-to-market
• Active management – market strategies, seeking positive change at the
inefficiencies allow skilled stock- margin to exploit market inefficiencies.
pickers to outperform. The result is a diversified portfolio
spanning sectors, business models, and
• Expanded opportunity set – vast
economic cycles.
## universe of around 2,000 US small- ”
caps (more than half of global listed
In Summary
smaller companies).
Offering diversification, growth potential
• Diversification – lower correlation to and a breadth of opportunities, US
large-caps improves overall portfolio small-caps deserve serious portfolio
efficiency. consideration, in the Board’s view.
While individually small, collectively they
• Lower risk – US listings generally have
account for nearly three-quarters of all
higher governance standards relative
US listed companies across a diverse mix
to global peers.
of sectors. Though sometimes neglected,
Brown Advisory’s Approach this niche allows skilled active managers
to unlock overlooked value. Despite
Brown Advisory has been investing in
some higher risks, a modest small-
US companies of all sizes for over 25
cap allocation can enhance portfolio
years. It manages approximately $10
efficiency for patient, long-term investors
billion across small-cap strategies for
aiming to boost their returns.
institutional, intermediary, and high net
worth clients. Clients benefit from Brown
for the year ended 30 June 2024 3
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Brown Advisory US Smaller Companies plc
## Investment Objective, Investment Policy
## and Benchmark

| Investment Objective | Investment Limits | Benchmark Index |
| --- | --- | --- |
| The Company’s objective is to achieve | The Board has prescribed limits on | Sterling adjusted |
| long-term capital growth by investing | the investment policy, including: | Russell 2000 Total |
| in a diversified portfolio consisting |  | Return Index (the |

 The Portfolio will comprise at all
primarily of quoted US smaller and ‘benchmark’).
times a minimum of 40 securities
medium-sized companies.
(excluding cash);
Investment Policy
 No single holding shall constitute
The Portfolio Manager takes a more than 5% of total assets at the
disciplined approach to investment, time of investment;
emphasising long-term risk-adjusted
 No derivative instruments
returns. The Portfolio Manager
(excluding warrants) may be held
believes that the US smaller and
without the prior approval of the
medium-sized company sector
Board;
is a diverse and dynamic part of
 Investments in unlisted securities
the North American market and
shall not exceed 5% of total assets
continues to provide opportunities
at the time of investment and any
for capital growth over the long
such investments shall require
term. The sector is highly diversified
prior Board approval;
with a great many companies from
which to choose. Many companies  The Company shall not make any
are relatively immature, whether new investments in other UK listed
financially or operationally or in terms investment companies;
of management or market position.
 In any event, not more than 10%
They tend to be highly geared to
in aggregate of the total assets
growth and are particularly vulnerable
of the Company, and any of its
to market and other changes.
subsidiaries, may be invested in

| Against this background, the | other closed-ended investment |
| --- | --- |
| Company has adopted an investment | funds (including listed investment |
| style that focuses on companies | trusts) whether or not such funds |
| with durable growth, scalable go-to- | have stated investment policies to |
| market strategies and well-aligned | invest no more than 15% of their |
| management and shareholder | total assets in other listed closed- |
| interests, and whose shares are | ended investment funds (including |
| considered by the Portfolio Manager | listed investment trusts); |

to offer above-average capital
 Borrowings, including overdraft
growth at attractive valuations. The
facilities, shall not exceed 20% of
Portfolio Manager believes that this
the Company’s total assets and
is an excellent approach to long-term
shall require prior Board approval;
investment in this sector.
 The Company shall not take legal
or management control over any
investments in its portfolio.
4 Annual Report and Financial Statements 2024
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Strategic Report Governance Company InformationFinancial Statements Financial Statements Company Information
## Strategic Report
for the year ended 30 June 2024 5
for the year ended 30 June 2024 5
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Brown Advisory US Smaller Companies plc
## Financial Highlights for the year ended
## 30 June 2024 Ordinary Share Performance

| Net asset value (pence)* | Closing price (pence) |
| --- | --- |
| 1,471.4 | 1,282.50 |
| +2.8% (2023: 1,431.9 ) | +5.1% (2023: 1,220.00 ) |
| Russell 2000 Total Return Index | Discount to net asset value (%)* |

(sterling adjusted)
## (12.8)
## 8,699.00
(2023: (14.8))
+10.7% (2023: 7,860.00)
Ongoing charges ratio (%)*
## 1.05
(2023: 1.00)

|  |  |  |  | Net asset |  | Year-on-year change in |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  | value per |  |  | net asset value per |  |  | Year-on-year change in |  |  |
| Year ended | Net assets |  | Ordinary share |  |  |  |  | Ordinary share |  |  | Benchmark Index |  |
| 30 June |  | £’000 |  |  | p |  |  |  | % |  |  | % |

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.
6 Annual Report and Financial Statements 2024
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Strategic Report

Governance

Financial Statements

Company Information

# Chairman's Statement

![img-4.jpeg](img-4.jpeg)

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.

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

for the year ended 30 June 2024 7
Brown Advisory US Smaller Companies plc
## Chairman’s Statement continued
12 month return to
long way to go’, even if tight conditions Hoping that the Fed would soon
30 June 2024 in US$
would weigh on economic activity. concede and cut rates, US equity
Given this rhetoric and data that markets pushed steadily higher
Russell 2000 (%)
showed the economy and jobs market from November onwards, without
to be still in good shape, 10-year any major setbacks, and closed our
## 10.1%

| bond yields moved steadily higher, | financial year around their all-time |  |
| --- | --- | --- |
| briefly touching 5.0% in October. | highs. Although the market leaders | S&P 500 (%) |
| This restrained equity markets in this | were still the ‘Magnificent Seven’, and |  |
| period, and held back in particular the | other technology stocks linked to AI, |  |

## 24.6%
smaller company sector, not helped where news flow remained upbeat,
by investors continuing to favour the earnings continued to surprise
NASDAQ (%)
mega-caps, particularly those now positively and valuations seemed
known as the ‘Magnificent Seven’, not unreasonable, other sectors
## 29.6%
and other technology stocks with were also pulled higher in their wake.
any perceived connection to artificial This included small caps which until
intelligence (AI). then had spent much of the year
in the shadow of their larger peers,
In November, the mood in the
but which met with some renewed
markets began to brighten again.
buying interest. Within the small cap
Hopes grew that, with improving
arena, similar trends were at play as
inflation numbers, mixed retail sales
in large cap with the winners being
and some softening in the jobs
technology stocks, anything seen to
market, the Fed’s tightening cycle
be AI related and momentum plays,
had come to an end and that a steady
often driven higher by speculative
programme of interest rate cuts lay in
retail buying despite having poorer
store. Indeed, investors’ expectations
fundamentals.
for rate cuts at this time moved well

| ahead of those suggested by the | As mentioned at the beginning of |
| --- | --- |
| Fed in its famous post-meeting ‘dot | my statement, our performance |
| plots’, both in terms of timing and | this year was disappointing, both |
| of scope. Nonetheless, the Fed held | in absolute and in relative terms. |
| firm throughout the first half of 2024, | Top-down, our portfolio suffered |
| refusing to cut rates as it argued that, | from being underweight financials, a |
| despite some softening, the economy | sector our Portfolio Managers tend |
| and the jobs market remained | not to favour, having little exposure |
| resilient, while inflation risks had | to perceived AI plays for valuation |
| not gone away. It did acknowledge, | reasons, and avoiding the more |
| however, that the peak in rates had | speculative, indebted, low-quality |
| probably been reached, but made | earnings situations that enjoyed a |
| no promises as to when the first cut | sudden rally in November/December. |
| would come. This was despite several | Underperformance this year also |
| other major central banks cutting | came from stock selection in two |
| interest rates towards the end of the | specific areas, namely healthcare |
| period. | and information technology, where |

8 Annual Report and Financial Statements 2024
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| our portfolio was hit unexpectedly by | Trust’s NAV rose by 6.4%, compared |
| --- | --- |
| negative earnings surprises in a clutch | to an increase in the benchmark |
| of our names, some of which had to | of 8.9%, equivalent to annualised |
| be reassessed and have since been | returns over the three years of 2.1% |

Within the smaller
sold. and 2.9% respectively. We had
hoped for better, particularly given company sector,
Key positive contributors to return
our Manager, Brown Advisory’s, similar trends
over the year were Casey’s General
impressive long-term performance
were at play as
Stores, Pinterest, Waste Connections,
## record in its US smaller companies “
Neurocrine Biosciences and Bright in the large cap
strategy, which attracted us to
Horizons, while the main detractors space, with the
them in the first place and which
were Accolade, SI-BONE, agilon
winners being
we have been following since their
health, Rentokil Initial and Workiva.
technology stocks,
appointment.
Over the year, in US dollar terms, the anything seen to
Over the three-year period,
Russell 2000 returned 10.1%, the
be AI-related and
sector allocation was the main
S&P 500 returned 24.6% and the
momentum plays.
detractor to performance with
Nasdaq returned 29.6%. The pound/
an underweight position in the oil
dollar rate was little changed over the
sector. Stock selection was more
twelve-month period, moving from
positive, particularly in the more
1.2714 to 1.2641, because of which
growthy areas of healthcare and
sterling-based shareholders made no
information technology. Key positive
currency gains this year.
contributors to performance
Portfolio Manager and over the three-year period were
Continuation Vote Biohaven Pharmaceuticals, EVO
## ”
A more detailed coverage on the Payments, Mimecast Limited, Waste
development of the US smaller Connections and Curtiss-Wright
company sector over the past Corp., while detractors included Angi,
twelve months and our activity Leslie’s, Azenta, Oak Street Health
and performance is included in the and Natera.
Portfolio Manager’s Review on pages
The Board noted that, despite
14 to 17.
the more challenging market

| With three years having passed | environment, the managers |
| --- | --- |
| since Brown Advisory took over | maintained their investment |
| the management of the portfolio in | approach and their search for long- |
| June the Board undertook a detailed | term compounders that offer durable |
| review of the Trust’s investment | growth, good governance and a |
| performance, its fee structure and | strong ‘go-to-market’ position, even |
| its remit to ensure that they remain | if this meant missing out on many |
| appropriate and relevant. Between | of the more momentum-driven and |
| 31 March 2021, the date from which | speculative stocks which have led the |
| Brown Advisory commenced | smaller companies markets of late. |

management, and 31 March 2024 the
for the year ended 30 June 2024 9
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Brown Advisory US Smaller Companies plc

# Chairman's Statement continued

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

Closing price (pence)

1,282.50

Net Asset Value (pence)

1,471.4

Discount to net asset value

12.8%

10 Annual Report and Financial Statements 2024
Strategic Report

Governance

Financial Statements

Company Information

“
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.

for the year ended 30 June 2024 11
Brown Advisory US Smaller Companies plc
## Chairman’s Statement continued

| Annual General Meeting | Shareholder Communications |  |
| --- | --- | --- |
| This year’s AGM will be held on | The Board encourages shareholders |  |
| Monday, 4 November 2024 at 2.00pm | to visit the Company’s website |  |
| at the offices of Brown Advisory, 18 | (www.brownadvisory.com/basc) for |  |
| Hanover Square, London W1S 1JY. It | the latest information, podcasts and | Despite a difficult |
| will include a short presentation via | monthly factsheets. | year, the Board |

video-link by Chris Berrier, Portfolio
reiterates its
Outlook
Manager, covering the performance
confidence in
So far in 2024, the US economy
## of the Company over the past “
Brown Advisory’s
has continued to perform well, and
year as well as his outlook for the
the recession forecast by many has approach and
future. The Board and Portfolio
again failed to materialise. Consumer remains optimistic
Manager would welcome questions
spending has been the linchpin of
which shareholders may submit for the US smaller
the economy, driven by jobs growth,
to: InvestmentTrustEnquiries@ company sector
rising wages and the drawdown
brownadvisory.com Subject to
going forward.
of savings accumulated from the
confidentiality, we will respond to any
pandemic period. At the same time,
questions submitted either directly
investment spending has held up well
or by publishing our response on the
due to government incentives and
Company website.
the move towards reshoring given the
Electronic proxy voting is now
rising geopolitical and supply chain
available, and shareholders are
risks. The Board sees these trends
encouraged to submit voting
continuing and the US economy
instructions using the web-
remaining resilient. At the same time,
## based voting facility www. ”
market expectations are for inflation
eproxyappointment.com and
to move back towards the Fed’s
www.proxymity.io for institutional
targeted range, enabling the latter
shareholders. In order to use
to embark on its much-anticipated
electronic proxy voting, shareholders
programme of interest rate cuts as of
will require their shareholder
the autumn. Certainly, the tone of the
registration number, control
US central bank has been softening
number and pin. If you do not have
over the summer, as evidenced by
access to these details please
Jerome Powell’s speech at the recent
contact the Company’s Registrar,
Jackson Hole symposium where the
Computershare, whose details can be
chair of the Fed declared that ‘the
found on page 104 of this report.
time has come for policy to adjust’.
Notice of the AGM, containing
Against a background of a reasonably
full details of the business to be
healthy economy and falling interest
conducted at the meeting, is set out
rates, US equity markets will hopefully
on pages 96 and 97 of this report.
continue nonetheless to perform well.
More importantly for us, we see this as
a generally favourable background for
smaller companies, particularly given
12 Annual Report and Financial Statements 2024
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
Strategic Report Governance Company Information 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
for the year ended 30 June 2024 13
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

# Portfolio Manager's Review

![img-5.jpeg](img-5.jpeg)

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%¹. Several factors contributed to this underperformance, which we'll explain below.

### 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.

¹ Data sourced by Refinitiv. Copyright © Refinitiv, 2023.

14 Annual Report and Financial Statements 2024
Strategic Report Governance Company Information Financial Statements
Individual investors, also known as Despite this increase, we remain
retail investors, are non-professional committed to our philosophy and
market participants who trade process. While our portfolio’s relative
securities for their personal accounts. swings can be significantly positive
These market
The surge in their activity can or negative over short periods, our
dynamics led
significantly impact market dynamics, portfolio’s long-term fortunes will
to a small-cap
leading to increased volatility and be governed by the fundamental
benchmark that
price shifts. progress of the companies in which
## “
we invest. We continue to remain had become
These market dynamics led to a
active, adding to our winners, somewhat
small-cap benchmark that had
reducing or selling poorer performers,
distorted, with the
become somewhat distorted, with
and adding new positions with
the largest constituent of the Russell largest constituent
favourable risk/reward profiles.
2000 Index, SMCI, valued at $46bn of the Russell
by the end of May 2024. The index
Key Factors Impacting 2000 Index, SMCI,
was rebalanced in late June 2024,
Performance
valued at $46bn
removing some of these outliers.
 Most of our fiscal year relative by the end of May
Following SMCI’s exit from the index,
underperformance occurred in the
2024.
the maximum market capitalisation
final weeks of 2023. Our strategy
drops to just under $11 billion. This
was ahead of the Russell 2000
results in an index more aligned with
Index and roughly tied with the
our present portfolio weights. We are
Russell 2000 Growth Index for
modestly underweight in healthcare
the calendar year as we entered
and closely aligned with the
the month of November last year.
benchmark in information technology.
However, people became excited
Additionally, we are overweight in
about the possibility that the
Industrials, including a 5%+ position
Federal Reserve might switch to a
## ”
in waste management companies,
less strict policy which prompted a
which are likely better mapped as
classic, lower quality, risk-on rally—
utilities or consumer staples.
where investors flock to higher-risk

| Our strategy’s monthly tracking | assets hoping for greater returns— |
| --- | --- |
| error has risen from around 1.5% | resulting in our higher quality |
| pre-COVID to nearly 2.4% post- | portfolio struggling. This led to us |
| COVID. Tracking error measures the | lagging the Russell 2000 Index by |
| difference between the performance | about 5% during the November- |
| of a portfolio and its benchmark. It | December rally. |

is often used to assess how closely a
 The absence of Super Micro
portfolio follows the index to which it is
Computer (SMCI) and
benchmarked. A higher tracking error
MicroStrategy (MSTR) in our
indicates more significant deviations
portfolio hurt results. Despite
from the benchmark, while a lower
examining these stocks over
tracking error suggests the portfolio
the years, they did not align
is closely aligned with the benchmark.
with our “3G” investment filter.
for the year ended 30 June 2024 15
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Brown Advisory US Smaller Companies plc

## Portfolio Manager’s Review continued

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$^{2}$. 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.

> *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.*

![img-6.jpeg](img-6.jpeg)

$^{2}$ Source: Factset as at 30 June 2023.

16 Annual Report and Financial Statements 2024
Strategic Report Governance Company Information Financial Statements

| Notable additions include Applied | We’re grateful for your patience |
| --- | --- |
| Industrial Technologies, a leading | with short-term performance |
| distributor of industrial machinery | fluctuations. Our enduring objective is |
| with strong market positioning; | to outperform small-cap benchmarks |
| Haemonetics, which is using its strong | with reduced risk, a goal we’ve |
| cash flow to drive significant earnings | achieved as an investment team over |
| growth through acquisitions; Kadant, | the past 18 years. As the investment |
| a high-quality industrial company | landscape evolves, so too does our |
| with a proven management team; and | strategy, ensuring we stay ahead in a |
| Vaxcyte, a biotechnology firm with a | dynamic market. |

promising pneumococcal vaccine. We
believe these companies offer strong
Portfolio Manager
long-term growth potential and align
Brown Advisory LLC
well with our investment philosophy.
20 September 2024
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.
for the year ended 30 June 2024 17
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Brown Advisory US Smaller Companies plc
## Twenty Largest Equity Holdings
## as at 30 June 2024
Industrials
### 1 Waste Connections
Waste Connections, Inc. provides non-hazardous solid
waste collection services for commercial, industrial,
and residential customers. The company offers
Market value (£‘000) Percentage of Portfolio
collection, landfill disposal, and recycling services
for various recyclable materials, including compost,
## 7,724 4.6
cardboard, office paper, plastic containers, glass
(2023: 6,255) (2023: 3.9) bottles, and ferrous and aluminium metals.
### Bright Horizons Family Consumer Discretionary
2
Bright Horizons Family Solutions Inc. provides
### Solutions
childcare and early education services as well as other
services designed to help employers and families to
Market value (£‘000) Percentage of Portfolio
better address the challenges of work and life. The
company provides services primarily under multi-year
## 6,125 3.7
contracts with employers who offer childcare and other
(2023: 5,086) (2023: 3.2) dependent care solutions as part of their employee
benefits packages.
Energy
### 3 ChampionX
ChampionX Corporation provides energy solutions.
The company focuses on upstream and midstream
oilfield technology such as chemistry programs and
Market value (£‘000) Percentage of Portfolio
drilling activities. ChampionX serves customers
worldwide.
## 4,364 2.6
(2023: 3,498) (2023: 2.2)
Consumer Staples
### 4 Casey’s General Stores
Casey’s General Stores, Inc. operates convenience
stores in the Midwest. The company offers food,
beverages, tobacco products, health and beauty aids,
Market value (£‘000) Percentage of Portfolio
automotive supplies, and other non-food items, as well
as selling gasoline.
## 4,343 2.6
(2023: 4,050) (2023: 2.6)
18 Annual Report and Financial Statements 2024
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Strategic Report Governance Company Information Financial Statements
Industrials
### 5 Valmont Industries
Valmont Industries, Inc. designs and manufactures
poles, towers, and structures for lighting,
communication, and utility markets and provides
Market value (£‘000) Percentage of Portfolio
protective coating services for infrastructure. The
company also manufactures and distributes industrial
## 4,256 2.6
and agricultural irrigation products in addition to a
(2023: 2,170) (2023: 1.4) wide variety of fabricated products for commercial and
industrial applications.
Biotechnology
### 6 SPDR S&P Biotech ETF
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
Market value (£‘000) Percentage of Portfolio
Industry Index, an equal-weighted index. The index
tracks all the US common stocks listed on the NYSE,
## 4,168 2.5
American Stock Exchange, NASDAQ National Market
(2023: 4,003) (2023: 2.5) and NASDAQ Small Cap exchanges.
Healthcare
### 7 Neurocrine Biosciences
Neurocrine Biosciences, Inc. is focused on the
discovery and development of therapeutics
for neuropsychiatric, neuroinflammatory and
Market value (£‘000) Percentage of Portfolio
neurodegenerative diseases and disorders. The
company is developing therapeutic interventions for
## 4,081 2.5
anxiety, depression, Alzheimer’s disease, insomnia,
(2023: 2,778) (2023: 1.8) stroke, malignant brain tumours, multiple sclerosis,
obesity and diabetes.
Financials
### 8 Prosperity Bancshares
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
Market value (£‘000) Percentage of Portfolio
variety of commercial and consumer loans. Prosperity
Bank operates in the greater Houston metropolitan
## 3,961 2.4
area and neighbouring counties in Texas.
(2023: 3,633) (2023: 2.3)
for the year ended 30 June 2024 19
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
## Twenty Largest Equity Holdings continued
Information Technology
### 9 Dynatrace
Dynatrace, Inc., through its subsidiaries, develops
software intelligence platforms for the enterprise cloud.
Its software intelligence platforms allow customers to
Market value (£‘000) Percentage of Portfolio
modernize and automate IT operations, develop and
release high quality software faster and improve user
## 3,771 2.3
experiences for better business outcomes.
(2023: 3,742) (2023: 2.4)
Healthcare
### 10 Encompass Health
Encompass Health provides inpatient rehabilitative
healthcare services. The company operates inpatient
rehabilitation hospitals, outpatient and rehabilitation
Market value (£‘000) Percentage of Portfolio
satellites, and home health agencies. Encompass
Health provides treatment on both an inpatient and
## 3,646 2.2
outpatient basis.
(2023: 2,620) (2023: 1.6)
Healthcare
### 11 HealthEquity
HealthEquity, Inc. provides technology-enabled
services platforms that allow consumers to make
healthcare saving and spending decisions. The
Market value (£‘000) Percentage of Portfolio
company enables consumers to access their tax-
advantaged healthcare savings, compare treatment
## 3,638 2.2
options, pay healthcare bills, receive personalised
(2023: 3,044) (2023: 1.9) benefit and clinical information and earn wellness
incentives.
Information Technology
### 12 Entegris
Entegris, Inc. provides materials management products
and services to the microelectronics industry on a
worldwide basis. The company provides products
Market value (£‘000) Percentage of Portfolio
such as wafer shippers, wafer transport and process
carriers, pods and work-in-process boxes. Entegris also
## 3,479 2.1
provides chemical delivery products such as valves,
(2023: 2,831) (2023: 1.8) fittings, tubing, pipe and containers.
20 Annual Report and Financial Statements 2024
Job No: 52458 Proof Event: 31 Black Line Level: 5 Park Communications Ltd Alpine Way London E6 6LA
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Strategic Report Governance Company Information Financial Statements
Materials
### 13 HB Fuller
H.B. Fuller Company manufactures and markets
adhesives, sealants, coatings, paints and other
specialty chemical products worldwide. The company’s
Market value (£‘000) Percentage of Portfolio
products are sold in countries that include North
America, Europe, Latin America, the Asia Pacific
## 3,345 2.0
region, India, the Middle East, and Africa.
(2023: 3,091) (2023: 1.9)
Industrials
### 14 Casella Waste Systems
Casella Waste Systems integrated and non-hazardous
solid waste services throughout the Eastern United
States. The company offers collection, transfer,
Market value (£‘000) Percentage of Portfolio
disposal and recycling services, generates steam, and
manufactures finished products utilising recyclable
## 3,332 2.0
materials.
(2023: 1,208) (2023: 0.8)
Information Technology
### Phreesia
15
Phreesia Inc. designs and develops healthcare software.
The company offers solutions for appointments, regis-
Market value (£‘000) Percentage of Portfolio tration, clinical support, patient surveys, and analysis
and reports. Phreesia serves patients and doctors in the
United States.
## 3,321 2.0
(2023: 2,344) (2023: 1.5)
Healthcare
### 16 NeoGenomics
NeoGenomics operates a network of clinical
laboratories that specialises in cancer genetics
diagnostic testing services. The company’s
Market value (£‘000) Percentage of Portfolio
services include cytogenetics, fluorescence in-situ
hybridization (FISH), flow cytometry, morphology,
## 3,272 2.0
anatomic pathology, and molecular genetic testing.
(2023: 2,388) (2023: 1.5) NeoGenomics serves pathologists, oncologists,
urologists and hospitals.
for the year ended 30 June 2024 21
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## Twenty Largest Equity Holdings continued

|  **17 Bruker** Market value (£'000) **3,190** (2023: 2,674) | Percentage of Portfolio **1.9** (2023: 1.7) | **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.  |
| --- | --- | --- |
|  **18 MSA Safety** Market value (£'000) **3,145** (2023: 2,900) | Percentage of Portfolio **1.9** (2023: 1.8) | **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.  |
|  **19 CCC Intelligent Solutions Holdings** Market value (£'000) **3,052** (2023: 301) | Percentage of Portfolio **1.8** (2023: 0.2) | **Industrials** Provides cloud-based software as a service (SaaS) platform connecting trading partners, facilitating commerce and supporting mission-critical, artificial intelligence-enabled digital workflows.  |
|  **20 Envestnet** Market value (£'000) **2,979** (2023: 1,814) | Percentage of Portfolio **1.8** (2023: 1.1) | **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.  |
|  **Total** Market value (£'000) **79,192** | Percentage of Portfolio **47.7** | 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.  |

22 Annual Report and Financial Statements 2024
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Company Information

# 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**  |
|  **Pinterest** 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**  |

for the year ended 30 June 2024 23
Brown Advisory US Smaller Companies plc

## List of Investments continued

|  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**  |
|  **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**  |
|  **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**  |

24 Annual Report and Financial Statements 2024
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Financial Statements

Company Information

|  **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**  |
|  **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**  |

for the year ended 30 June 2024 25
Brown Advisory US Smaller Companies plc

## List of Investments continued

|  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**  |

26 Annual Report and Financial Statements 2024
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Governance

Financial Statements

Company Information

# **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**

# **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**

for the year ended 30 June 2024 27
Brown Advisory US Smaller Companies plc

## 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**  |

28 Annual Report and Financial Statements 2024
Strategic Report

Governance

Financial Statements

Company Information

# **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**

# **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**

for the year ended 30 June 2024 29
Brown Advisory US Smaller Companies plc

## 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**  |

30 Annual Report and Financial Statements 2024
Strategic Report

Governance

Financial Statements

Company Information

|  **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.

for the year ended 30 June 2024 31
Brown Advisory US Smaller Companies plc

# 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

32 Annual Report and Financial Statements 2024
Strategic Report

Governance

Financial Statements

Company Information

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**.

for the year ended 30 June 2024 33
Brown Advisory US Smaller Companies plc

# Strategic Report continued

## 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.

34 Annual Report and Financial Statements 2024
Strategic Report Governance Company Information Financial Statements
Risk Mitigating Action
Investment objective: the Board review: the Board formally reviews the Company’s
Company’s objective becomes objective and related strategies on an annual basis, or more
unattractive to investors which regularly if appropriate.
could result in a lack of demand for
Shareholder communication: the Board is cognisant of
the Company’s shares.
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 Adherence to investment guidelines: the Board sets
Company adopts inappropriate investment guidelines and restrictions which the Portfolio
investment strategies in pursuit Manager follows, covering matters such as asset allocation,
of its objective which could result diversification, gearing and currency exposure. These
in decreased demand for the guidelines are reviewed regularly and reports on compliance
Company’s shares, leading to a with them are reviewed at Board meetings.
widening of the discount and poor
In order to ensure adequate diversification, the Board has
investment performance.
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 monitoring: the Board, through the Portfolio
discount to NAV: A protracted Manager and AIFM, keeps the level of discount under con-
discount to NAV could reduce the stant review. The Board is responsible for the Company’s
attractiveness of the Company’s share buyback policy and is prepared to authorise the use of
shares. 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: Monitoring of performance: the Board keeps
the appointment or continuing performance under continual review. It meets the Portfolio
appointment of a portfolio Manager on a regular basis and keeps under close review
manager with inadequate (inter alia) its resources and adherence to investment
resources, skills or expertise, or guidelines. The Board discusses with the Portfolio Manager
which makes poor investment reasons for over or under-performance at every Board
decisions. This could result in poor meeting.
investment performance, a loss
A detailed formal appraisal of the Portfolio Manager is
of value for shareholders and a
carried out annually by the Board. The Board also keeps
widening discount.
under review the adequacy of risk controls.
for the year ended 30 June 2024 35
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
## Strategic Report continued
Risk Mitigating Action
Financial/market: insufficient Management controls: the Portfolio Manager has a range
oversight or controls over financial of procedures and controls relating to the Company’s
risks, including foreign currency financial instruments and maintains a closed ‘approved
risk, market price risk, interest broker’ list.
rate risk, liquidity risk, credit and
Board review: as stated above, the Board sets investment
counterparty risk, and insufficient
guidelines and restrictions which are reviewed regularly and
revenue forecasting and
the Portfolio Manager reports on compliance with them at
monitoring, could result in losses
Board meetings.
to the Company.
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 Board awareness: the Directors have an awareness of
failure to comply with, relevant the more important regulations and are provided with
regulations (including the information on changes by the Association of Investment
Companies Act, the Financial Companies. In terms of day to day compliance with
Services and Markets Act, the regulations, the Board is reliant on the knowledge and
Alternative Investment Fund expertise of the AIFM and Company Secretary. However,
Managers Directive, accounting where necessary, the Board engages the services of external
standards, investment trust advisers.
regulations, the FCA Listing
Management controls: the Company Secretary and
Rules, Disclosure Guidance
accounting teams use checklists to aid compliance and
and Transparency Rules and
these are supported by the AIFM’s compliance monitoring
Prospectus Rules) could result in
programme and risk-based internal audit investigations.
fines, loss of reputation, reduced
demand for the Company’s shares
and potentially the loss of an
advantageous tax regime.
36 Annual Report and Financial Statements 2024
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
Strategic Report Governance Company Information Financial Statements
Risk Mitigating Action
Operational (including Agreements: written agreements are in place defining the
cybercrime) the Company is roles and responsibilities of all third-party service providers.
reliant on services provided by
Internal control systems of the AIFM and Portfolio
third parties (in particular those
Manager: the Board receives reports on the operation and
of the Portfolio Manager, AIFM,
efficacy of IT and control systems, including those relating to
custodian and depositary) and
cyber-crime and internal audit and compliance functions.
any control gaps and failures in
their operations could expose the Safekeeping of assets: the Depositary is ultimately
Company to loss or damage. 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 Board and Portfolio Manager awareness: geopolitical
pandemic, climate change and events over which the Company has no control are always a
the conflict in Ukraine): the risk. The Board and Portfolio Manager regularly horizon scan
impact of geopolitical events could and consider what they can do to address these risks.
result in losses to the Company.
for the year ended 30 June 2024 37
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

# Strategic Report continued

## 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

38 Annual Report and Financial Statements 2024
Strategic Report Governance Company Information Financial Statements
the inside back cover of this submitted either directly or by The AIFM and the Portfolio
document. publishing our response on the Manager
Company website. All views of
Brown Advisory LLC acts as the
Engagement With Suppliers,
the shareholders will be taken
Company’s Portfolio Manager
Customers And Others And
into consideration and action
and FundRock Partners Limited
The Effect On Principal
taken where appropriate.
has been appointed as the
Decisions
Company’s AIFM.
Online Information – The
The Shareholders – The
Company’s website contains the
The portfolio management
shareholders of the Company
annual and half yearly financial
function is critical to the long-
are both institutional and
report along with monthly
term success of the Company.
retail and details of those with
factsheets and commentaries
The Board and the Portfolio
substantial shareholdings are
from the Portfolio Manager. The
Manager maintain an open
provided on page 45.
daily NAV per share, monthly top
and constructive relationship,
The Board believes that
ten portfolio listings and other
with meetings taking place a
shareholders have a vital role
regulatory announcements can
minimum of four times per
in encouraging a higher level
be found on the regulatory news
annum, with monthly updates
of corporate performance and
service of the London Stock
and additional meetings as
is committed to listening to
Exchange.
required.
the views of its shareholders
Shareholder The ‘Management’ section on
and giving useful and timely
Communications page 33 in this report details
information. The Board provides
the Board’s consideration
open and accessible channels of Shareholders can raise issues or
of the Portfolio Manager’s
communication including those concerns at any time by writing
performance, its terms of
listed below. to the Chairman or the Senior
appointment and the Board’s
Independent Director at the
The AGM – The Company
annual assessment of the
Registered Office.
encourages participation from
Portfolio Manager’s continued
shareholders at its AGMs, where Further details about how
stewardship of the portfolio
they can communicate directly the Board incorporates the
and its oversight of the
with the Directors and Portfolio views of the Company’s
administrative functions.
Manager. The upcoming AGM shareholders can be found
The Audit and Risk Committee
will include a short presentation in the UK Stewardship Code
meets at least twice a year and
by the Portfolio Manager on the and the Exercise of Voting
as part of its role considers the
performance of the Company Powers section on page 48.
reports on the internal control
over the past year, as well as Further information about
objectives and procedures
an outlook for the future. The how the Board ensures that
of the Portfolio Manager, the
Board and Portfolio Manager each Director develops an
AIFM, and other third party
welcome questions which understanding of the views of
service providers together with
shareholders may submit to the Company’s shareholders
independent, external reviews
InvestmentTrustEnquiries@ can be found in the section
where appropriate.
brownadvisory.com Subject entitled Shareholder Relations
to confidentiality, the Board on page 49 of this report.
will respond to any questions
for the year ended 30 June 2024 39
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
## Strategic Report continued
The AIFM also supplies Other Third-Party Service
company secretarial services Providers
to the Company. The AIFM
As an externally managed
oversees the activities of the
investment company with no
Company’s other third-party
employees or physical assets,
suppliers on behalf of the
the principal stakeholders
Company and maintains open
of the Company are its
and collaborative relationships
shareholders, Portfolio Manager,
to maintain quality, efficiency
AIFM, Depositary, custodian,
and cost control through
administrator and registrar.
regular communication with
The continuance, or otherwise,
operational teams. The Board
of engagement of key third-party
regularly reviews reports
service providers are principal
from the Portfolio Manager,
decisions taken by the Board
the AIFM and Company
every year.
Secretary, the Depositary, the
Company’s broker, the investor In Summary
relations research provider
The governance structure and
and its independent Auditor.
decision-making process are
These provide vital information
underpinned by the duties of
concerning changes in market
the Directors under S172 on
practice or regulation which
all matters. The Board firmly
affect the Company and assist
believes that the sustainable
the Board in its decision-making
long-term success of the
process. Representatives from
Company is dependent upon
these providers attend Company
taking account of the interests of
Board meetings and give
all its key stakeholders.
presentations on a regular basis
For and on behalf of the Board
enabling in depth discussions
concerning their findings and
performance.
Stephen White
Chairman
20 September 2024
40 Annual Report and Financial Statements 2024
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Strategic Report Governance Company InformationFinancial Statements Strategic Report Governance Company InformationFinancial Statements
## Governance report
for the year ended 30 June 2024 41
for the year ended 30 June 2024 41
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Brown Advisory US Smaller Companies plc

# Directors

![img-7.jpeg](img-7.jpeg)

Stephen White†
Chairman of the Board

![img-8.jpeg](img-8.jpeg)

Ruth Beechey†

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.

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.

† Member of the Audit and Risk Committee.

42 Annual Report and Financial Statements 2024
Strategic Report Governance Company InformationFinancial Statements
† † †
Lisa Booth Jasper Judd Jane Routledge
Chairman of the Audit and Risk Senior Independent Director
Committee

| Appointed to the Board in | Appointed to the Board in | Appointed to the Board in April |
| --- | --- | --- |
| September 2015. Ms Booth | October 2022. Mr Judd is a | 2023, Ms Routledge is a non- |
| is a solicitor with many years’ | chartered accountant and | executive director of M&G Credit |
| experience in private practice. | non-executive director and | Income Investment Trust plc |
| She co-founded a law firm in | chairman of the audit committee | (MGCI) and abrdn Asian Income |
| the City of London in 2003 | of Dunedin Income Growth | Fund Limited. Previously, Ms |
| and developed and managed | Investment Trust plc and a non- | Routledge had a long career in |
| a practice focusing on private | executive director and chairman | the investment management |
| equity and investment fund | of the audit and risk committees | sector and has held a number |
| transactions during the | of JPMorgan Indian Investment | of senior marketing positions |
| subsequent ten years. She | Trust plc and Schroder Asian | including at Schroders, Invesco, |
| currently works as the General | Total Return Investment | Hermes and Seven Investment |
| Counsel of a Berlin-based | Company plc. Previously, he | Management. |
| company which provides online | had a long career in finance and |  |
| travel search and ticket booking | strategy. |  |

services.
† † Member of the Audit and Risk Committee.
for the year ended 30 June 2024 43
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Brown Advisory US Smaller Companies plc
## Report of the Directors

| The Directors present the |  being available to | Company’s issued share |
| --- | --- | --- |
| Annual Report and Financial | shareholders and other | capital consisted of 18,223,413 |
| Statements of the Company | Directors to address any | Ordinary shares of 25p each, of |
| for the year ended 30 June | concerns or issues they feel | which 6,361,254 were held in |
| 2024. | have not been adequately | Treasury. As a result, the voting |
|  | dealt with through the usual | shares on 30 June 2024 totalled |

Directors

|  | channels of communication | 11,862,159. All Ordinary shares |
| --- | --- | --- |
| The Directors of the Company | (through the Chairman). | rank equally for dividends and |
| and their biographies can be |  | distributions and carry one vote |

Directors’ Remuneration and
found on pages 42 and 43. each. There are no restrictions
Interests
concerning the transfer of
Mr White, Ms Booth, Mr Judd,
The Directors’ Remuneration securities in the Company, no
Mr Parritt and Ms Routledge
Report and Policy special rights with regard to
held office throughout the year
on pages 59 to 62 control attached to securities,
under review. Ms Beechey was
provides information on no agreements known to the
appointed to the Board on 1 July
the remuneration and Company between holders
2024. Mr Judd is Chairman of
shareholdings of the Directors. of securities regarding their
the Audit and Risk Committee
transfer and no agreement to
and Ms Routledge serves as the
Results and Dividends
which the Company is party that
SID. Mr Parritt retired from the
The Company’s Net Asset Value
affects its control following a
Board on 30 June 2024.
per Ordinary share and the
takeover bid.
The SID serves as a sounding Ordinary share price increased
Details of the capital structure
board for the Chairman and acts by 2.8% and 5.1% respectively
can be found in Note 13 to
as an intermediary for other in the year ended 30 June 2024,
the Financial Statements on
directors and shareholders. The compared to an increase of
page 91.
SID is responsible for: 10.7% in the sterling adjusted
Russell 2000 Total Return Index.
 leading the annual
Upon a winding-up, after
assessment of the
Results and reserve
meeting the liabilities of the
performance of the
movements for the year are
Company, the surplus assets
Chairman;
set out in the Statement of
would be distributed to
Comprehensive Income on
 holding meetings with the shareholders pro rata to their
page 76 and the Notes to
other Directors without the holdings of Ordinary shares.
the Financial Statements on
Chairman being present,
Notifiable Interests in the
pages 81 to 92.
when required;
Company’s Voting Rights
 carrying out succession The Net Assets of the
In accordance with the
planning for the Chairman’s Company at 30 June 2024
Disclosure and Transparency
role; were £174.5 million (2023:
Rules as issued by the Financial
£171.1 million). No distributable
 working with the Chairman, Conduct Authority (FCA), the
revenue is available for payment
other Directors and Company is required to be
of dividends.
shareholders to resolve major notified of any new or changes to
issues; and Capital Structure previously disclosed substantial
interests in its Ordinary shares.
As at 30 June 2024 the
44 Annual Report and Financial Statements 2024
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Strategic Report

Governance

Financial Statements

Company Information

## Substantial shareholders

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

|  Shareholder | Ordinary shares 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.

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.

## 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.

for the year ended 30 June 2024 45
Brown Advisory US Smaller Companies plc

## 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^{1} | Total remuneration paid^{2} £ | 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 | 677,086 | 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.

46 Annual Report and Financial Statements 2024
Strategic Report

Governance

Financial Statements

Company Information

## 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  |

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

for the year ended 30 June 2024 47
Brown Advisory US Smaller Companies plc
## Report of the Directors continued
depositary services and JPMCB UK Stewardship Code and Contentious issues are
for custodian services and the Exercise of Voting Powers identified and, where necessary
accounting services in respect (and where timescales
The Portfolio Manager is
of the Company. Documented permit), are discussed with
responsible for voting the shares
contractual arrangements corporate governance and/
it holds on the Company’s
are in place with these service or sustainability analysts
behalf. The Portfolio Manager’s
providers which define the and portfolio managers, and
Proxy Voting Policy can be found
areas where the Company has companies. The Portfolio
at https://www.brownadvisory.
delegated authority to them. Manager ensures that
com/us/sustainable-investing
The Audit and Risk Committee resolutions are voted in
The Board and the Portfolio
has considered the reports on accordance with this practice
Manager believe that
the internal control objectives and timely voting decisions are
shareholders have an important
and procedures of the Portfolio made.
role in encouraging a higher
Manager, the AIFM, JPMEL
From time to time, resolutions
level of corporate performance
and JPMCB, together with the
will be brought to annual general
and therefore adopt a positive
opinion of the service auditors
meetings of investee companies
approach to corporate
for these reports, which detail
by third parties encouraging
governance. The Portfolio
the measures and the testing of
companies to address specific
Manager aims to act in the best
the measures which are in place
environmental and/or social
interests of all its stakeholders
to ensure the proper recording,
concerns. In such instances the
by engaging with companies
valuation, physical security and
Portfolio Manager’s corporate
in which the Company invests,
protection from theft of the
governance and sustainability
and by exercising its voting
Company’s investments and
analysts will discuss their views
rights with care. Not only is
assets and the controls which
with the investment team and
this commensurate with good
have been established to ensure
the Company if appropriate.
market practice, but it also goes
compliance with all regulatory,
The Portfolio Manager will then
hand in hand with ensuring the
statutory and fiscal obligations
vote for what it considers to be
responsible investment of its
of the Company.
in the best financial interests of
clients’ funds. Equally, research
The Directors have also had shareholders of the Company,
is undertaken to determine their
regard to the procedures for whilst having regard for any
plans for maintaining social and
safeguarding the integrity of the specific sustainability concerns
environmental sustainability
computer systems operated unless otherwise directed.
within their business.
by the Portfolio Manager, the
In order to assist in the Common Reporting
AIFM, JPMEL and JPMCB and
assessment of corporate Standards
the key business continuity
governance and sustainability
The Regulations for Automatic
plans. The Board reviews the
issues and contribute to a
Exchange of Financial Account
procedures described above for
balanced view, the Portfolio
Information (the Common
the management of risk on an
Manager subscribes to external
Reporting Standard, CRS)
annual basis.
corporate governance and
issued by OECD have been
sustainability research providers
enacted in the UK through The
but does not necessarily follow
their voting recommendations.
48 Annual Report and Financial Statements 2024
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Strategic Report

Governance

Financial Statements

Company Information

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

for the year ended 30 June 2024 49
Brown Advisory US Smaller Companies plc

# Report of the Directors continued

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 authority will 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.

50 Annual Report and Financial Statements 2024
Strategic Report Governance Company InformationFinancial Statements
The Board, left to right: Ruth Beechey, Jasper Judd, Stephen White, Lisa Booth and Jane Routledge.
Any purchase of shares by 14 clear days’ notice. In order to Recommendation
the Company will be made in be able to do so shareholders
The Board considers that the
accordance with the Articles must have approved the calling
passing of the resolutions
of Association and the FCA of meetings on 14 clear days’
being put to the Company’s
Listing Rules in force at the time. notice. The approval will be
AGM would be in the best
No purchase of shares will be effective until the Company’s
interests of the Company and
made at a price in excess of the next AGM, when it is intended
its shareholders as a whole. It
estimated NAV. that a similar resolution will
therefore recommends that
be proposed. The Company
shareholders vote in favour of
Resolution 12: Notice of General
will also need to meet the
Resolutions 1 to 12, as set out
Meetings (special resolution)
requirements for electronic
in the Notice of Annual General
Resolution 12 is required to
voting under the Directive before
Meeting.
reflect the Shareholders’ Rights
it can call a General Meeting
By order of the Board
Directive (the ‘Directive’).
on 14 clear days’ notice. This
The Directive has increased FundRock Partners Limited
shorter notice period will only
Company Secretary
the notice period for General
be used where, in the opinion of
20 September 2024
Meetings of the Company to 21
the Directors, it is merited by the
days. If Resolution 12 is passed
purpose of the meeting.
the Company will be able to call
all General Meetings (other than
Annual General Meetings) on
for the year ended 30 June 2024 51
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

# Corporate Governance

## 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

52 Annual Report and Financial Statements 2024
Strategic Report

Governance

Financial Statements

Company Information

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:

|  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).

for the year ended 30 June 2024 53
Brown Advisory US Smaller Companies plc

# 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 |  |  |   |

## 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 www.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.

54 Annual Report and Financial Statements 2024
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Governance

Financial Statements

Company Information

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

for the year ended 30 June 2024 55
Brown Advisory US Smaller Companies plc
## Report 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
Jasper Judd
engagement partner and the audit
Chairman of the Audit and Risk Committee
team, making a recommendation
to the Board with respect to the
reappointment of the Auditor. It also
provides an opinion as to whether
Composition
the Annual Report, taken as a whole,
As Chairman of the Company’s Audit
is fair, balanced and understandable
and Risk Committee, I am pleased to
and provides the information
present the Committee’s report for
necessary for shareholders to
the year ended 30 June 2024.
assess the Company’s position and
The Audit and Risk Committee performance, business model and
consists of all Directors. I am strategy.
chairman of the Audit and Risk
The Company does not have an
Committee and a chartered
internal audit function as most of its
accountant. All committee members
day-to-day operations are delegated
are independent non-executive
to professional third parties.
directors.
The Committee also reviews the
Mr White continues to be a member
Company’s compliance with the Code
of the Audit and Risk Committee. The
and the AIC Code.
AIC Code permits the Chairman to
The Audit and Risk Committee has
be a member of the Audit and Risk
direct access to the Auditor, the
Committee if they were independent
Heads of Internal Audit, and the
on appointment, but not to chair it.
Risk and Compliance function of
The Chairman was independent on
the Portfolio Manager, and of the
appointment and continues to be
AIFM and reports its findings to the
so. In view of the size of the Board,
Board. The Board retains ultimate
the Directors feel it is appropriate
responsibility for all aspects relating
for him to continue as a member so
to external financial statements and
that the Audit and Risk Committee
other significant published financial
can continue to benefit from his
information.
experience and knowledge.
56 Annual Report and Financial Statements 2024
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Strategic Report

Governance

Financial Statements

Company Information

## 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:

for the year ended 30 June 2024 57
Brown Advisory US Smaller Companies plc

# 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

58 Annual Report and Financial Statements 2024
Strategic Report Governance Company InformationFinancial Statements
## Directors’ Remuneration Report and Policy

| The Board is pleased to present the | The Company’s current remuneration |
| --- | --- |
| Company’s annual remuneration report | policy is that fees payable to Directors |
| for the year ended 30 June 2024, | are commensurate with the amount |
| together with its remuneration policy, | of time Directors are expected to |
| in accordance with Schedule 8 of The | spend on the Company’s affairs, |
| Large and Medium-sized Companies | whilst seeking to ensure that fees |
| and Groups (Accounts and Reports) | are set at an appropriate level so as |
| (Amendment) Regulations 2013. | to enable candidates of a sufficient |

calibre and possessing suitable
The law requires the Company’s
knowledge and experience to be
Auditor to audit certain of the
recruited. The Company’s Articles
disclosures provided. Where
of Association state the maximum
disclosures have been audited, they
aggregate amount of fees that can
are indicated as such.
be paid to Directors in any one year.
The Auditor’s opinion is included in
This is currently set at £185,000 per
their report on pages 64 to 73.
annum and shareholder approval is
required for any changes to this.
Statement by the Chairman
The Board’s policy on remuneration is Directors’ fees are normally reviewed
set out below. and updated with effect from 1
January each year. Until 31 December
The Directors of the Company
2023, Directors’ annual fees were:
are non-executive and by way of
Chairman, £37,000; Chairman of the
remuneration receive an annual fee,
Audit and Risk Committee, £33,500;
payable quarterly in arrears.
and non-executive Directors,

| Details of the total emoluments | £28,000. With effect from 1 January |
| --- | --- |
| paid to Directors for the years | 2024 Directors’ annual fees were |
| ended 30 June 2023 and 30 June | revised to the following annual rates |
| 2024 are provided in the Annual | and are the rates currently payable: |

Report on Remuneration on page
Amount
61. payable
Role per annum
The Company does not award any
Chairman of the Board £39,200
other remuneration or benefits to the
Chairman of the Audit
Chairman or Directors. There are no
and Risk Committee £35,500
bonus schemes, pension schemes,
Non-Executive Director £29,700
share option or long-term incentive
schemes in place for the Directors. The Board plans to revise Director
fees next year in line with the
Directors’ Remuneration Policy
Company’s peer group, with effect
The remuneration policy of the
from 1 January 2025.
Company was approved by
Each Director is entitled to a base fee.
shareholders at the 2023 AGM for a
The Chairman of the Board is paid
maximum of three years.
a higher fee than other Directors to
for the year ended 30 June 2024 59
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Brown Advisory US Smaller Companies plc
## Directors’ Remuneration Report and Policy
## continued
reflect the additional work entailed by It is the Company’s policy for all
the role. The Chairman of the Audit Directors to stand for re-election
and Risk Committee also receives a annually. Any new Director
higher fee on the same basis. appointed is subject to election
by shareholders at the next AGM
The Board is authorised to obtain, at
following their appointment. The
the Company’s expense, outside legal
terms and conditions of Directors’
or other professional advice on any
appointments are set out in formal
matters within its Terms of Reference.
letters of appointment. The dates of
The Board did not seek external
appointment are set out below:
advice during the year under review.
Date of
The Board has not established a
Director Appointment
Remuneration Committee and
Stephen White 1 October 2020
any review of the Directors’ fees is
undertaken by the Board as a whole Ruth Beechey 1 July 2024
and has regard to the level of fees paid
Lisa Booth 29 September 2015
to non-executive directors of other
Jasper Judd 1 October 2022
investment companies of equivalent
size. Jane
Routledge 1 April 2023
Directors’ Service Contracts
Annual Report on Remuneration
No Director has a contract of service

| with the Company. Accordingly, | A single figure for the total |
| --- | --- |
| the Directors are not entitled to | remuneration of each Director is set |
| any compensation in the event of | out in the table below for the years |
| termination of their appointment or | ended 30 June 2024 and 30 June |
| loss of office, other than the payment | 2023, respectively. |

of any outstanding fees.
60 Annual Report and Financial Statements 2024
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Strategic Report Governance Company InformationFinancial Statements
Directors’ emoluments for the period (audited)
30 June 2024 30 June 2023
Total Total
remuneration remuneration
Fees Expenses for the year ended Fees Expenses 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 Statement Of Voting At The Last
On Directors’ Remuneration AGM
Compared With Distributions To
An ordinary resolution for
Shareholders
the approval of the Directors’

| The table below compares the | Remuneration Report will be put |
| --- | --- |
| remuneration payable to Directors to | to shareholders annually at the |
| distributions made to shareholders | Company’s Annual General Meeting. |
| during the financial year under review | This vote is advisory and not binding |
| and the prior year. In considering these | on the Company, nor does it affect |
| figures, shareholders should take | the remuneration payable to any |
| into account the Company’s principal | individual Director. However, it does |
| investment objective of achieving | give shareholders the opportunity |
| capital growth. In the year ended | to inform the Board of their views |
| 30 June 2024, the Company’s capital | on the Directors’ remuneration. |
| return was a net gain of £5.3 million | The Directors’ remuneration policy |
| (2023: net gain of £16.0 million). | sets out the Company’s policy on |

Directors’ remuneration.
30 June
30 June 2024 2023
The following sets out the votes
Director £’000 £’000
received at the last AGM of the
Remuneration
shareholders of the Company, held
paid to
on 6 November 2023, in respect
Directors 159 151
of the approval of the Directors’
Distributions Remuneration Report and the
to Directors’ Remuneration Policy.
shareholders
– dividends – –
Total value
of shares
repurchased 1,199 –
for the year ended 30 June 2024 61
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Brown Advisory US Smaller Companies plc
## Directors’ Remuneration Report and Policy
## continued
Votes cast for Votes cast against
Number of votes
Director Number % Number % Total votes cast
withheld
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 | Performance to 30 June 2024 |
| --- | --- |
| The Directors who held office at the | The graph below provides details of |
| end of the financial year covered by | the Company’s Ordinary share price |

this report and their beneficial interests
performance compared against the
in the Ordinary shares of the Company
Russell 2000 Total Return Index,
are detailed in the table above. There
expressed in sterling.
is no requirement for a Director to hold
shares in the Company. Performance from 30 June 2015 to
30 June 2024
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.
Source: Datastream
Directors’ Interests In Ordinary shares
(audited) On behalf of the Board and in accordance
with Part 2 of Schedule 8 of the Large and
30 June 30 June
Medium-sized Companies and Groups
2024 2023
(Accounts and Reports) (Amendment)
Lisa Booth 463 463
Regulations 2013, I confirm that the
Jasper Judd 2,768 2,000
Directors’ Remuneration Report and
Clive Parritt 10,000 10,000 policy summarises, for the year ended
30 June 2024, the review undertaken and
Jane Routledge 1,500 –
the decisions made regarding the fees
Stephen White 20,000 20,000
paid to the Board, as well as the future
There have been no further changes
remuneration policy of the Company.
to the Directors’ shareholdings since
By order of the Board
the year end.
300
As at 16 September 2024, the latest
250
practicable date prior to publication
200 Stephen White
of this document, no further changes
150 Chairman
had been notified.
100
20 September 2024
50
62 Annual Report and Financial Statements 2024
Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19 Jun-20 Jun-21 Jun-22 Jun-23 Jun-24
Benchmark Share Price NAV
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Strategic Report Governance Company InformationFinancial Statements
## Statement of Directors’ Responsibilities

| The Directors are responsible | inappropriate to presume | 1. the financial statements, |  |
| --- | --- | --- | --- |
| for preparing the Annual Report | that the Company will |  | prepared in accordance |
| and Financial Statements in | continue in business. |  | with the applicable set of |
| accordance with applicable law |  |  | accounting standards, give |

The Directors are responsible for
and regulation. a true and fair view of the
keeping adequate accounting
assets, liabilities, financial
Company law requires the records that are sufficient to
position and profit or loss of
Directors to prepare financial show and explain the Company’s
the Company; and

| statements for each financial | transactions and disclose with |  |  |
| --- | --- | --- | --- |
| year. Under that law the Directors | reasonable accuracy at any | 2. the Strategic Report |  |
| have elected to prepare financial | time the financial position of |  | includes a fair review of |
| statements in accordance with | the Company and enable them |  | the development and |
| United Kingdom Generally | to ensure that the financial |  | performance of the Company, |
| Accepted Accounting Practice | statements comply with |  | together with a description |
| (United Kingdom Accounting | the Companies Act 2006. |  | of the principal risks and |
| Standards and applicable laws) | They are also responsible for |  | uncertainties that the |
| including Financial Reporting | safeguarding the assets of |  | Company faces; and |
| Standard 102, the financial | the Company and hence for |  |  |

3. in their opinion the Annual
reporting standard applicable taking reasonable steps for the
Report and Financial
in the UK and the Republic of prevention and detection of
Statements, taken as a
Ireland. fraud and other irregularities.
whole, are fair, balanced and
Under company law the Under applicable law and understandable and provide
Directors must not approve the regulations, the Directors are the information necessary
financial statements unless they also responsible for preparing to assess the Company’s
are satisfied that they give a a Strategic Report, Report position and performance,
true and fair view of the state of of the Directors, Directors’ business model and strategy.
affairs of the Company and of the Remuneration Report and
So far as each Director is
return or loss of the Company Statement of Corporate
aware at the time the report is
for that period. In preparing Governance that comply with
approved:
those financial statements, the that law and those regulations.
1. there is no relevant audit
Directors are required to:
The Directors are responsible
information of which the
(a) select suitable accounting for the maintenance and integrity
Company’s Auditor is
policies and then apply them of the corporate and financial
unaware; and
consistently; information included
2. the Directors have taken all
on the Company website
(b) make judgements and
steps required of a company
w ww.brownadvisory.com/basc
accounting estimates
director to make themselves
which is a website maintained by
that are reasonable and
aware of any relevant audit
Brown Advisory LLP. Visitors to
prudent;
information and to establish
the website need to be aware that
(c) state whether applicable
that the Company’s Auditor
legislation in the United Kingdom
UK Accounting Standards
has been made aware of that
governing the preparation
have been followed, subject
information.
and dissemination of financial
to any material departures
statements may differ from By order of the Board
disclosed and explained in
legislation in other jurisdictions.
the financial statements;
Each of the Directors, who are
and
listed on pages 42 and 43 of this
Stephen White
(d) prepare the financial
report, confirms to the best of
Chairman
statements on the going
their knowledge that:
20 September 2024
concern basis unless it is
for the year ended 30 June 2024 63
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Brown Advisory US Smaller Companies plc
## Independent Auditor’s Report
To the Members of Brown Advisory US Smaller Companies PLC
Our opinion on the financial with the requirements of the are responsible for maintaining
statements Companies Act 2006. the Company’s accounting
records. Accordingly, we review
We have audited the financial
Basis for opinion
their involvement as a service
statements of Brown Advisory
We conducted our audit in
organisation, use reports and
US Smaller Companies plc
accordance with International
data provided to us by them,
(‘the Company’) for the year
Standards on Auditing (UK)
and consider the operation
ended 30 June 2024 which
(ISAs (UK)) and applicable law.
of controls and procedures
comprise the Statement of
Our responsibilities under those
operated by J. P. Morgan Chase
Comprehensive Income, the
standards are further described
Bank N.A. that are relevant to
Statement of Financial Position,
in the Auditor’s responsibilities
our audit.
the Statement of Changes in
for the audit of the financial
Equity, the Statement of Cash
We obtained our audit evidence
statements section of our
Flows and the notes to the
from substantive tests and as
report. We are independent of
financial statements, including
part of our risk assessment,
the Company in accordance
a summary of significant
we understood and assessed
with the ethical requirements
accounting policies. The
the internal controls in place
that are relevant to our audit of
financial reporting framework
at the Portfolio Managers,
the financial statements in the
that has been applied in their
and the accounting service
UK, including the FRC’s Ethical
preparation is applicable law
provider to the extent relevant
Standard as applied to listed
and United Kingdom Accounting
to our audit. This assessment
public interest entities, and we
Standards, including Financial
of the operating and accounting
have fulfilled our other ethical
Reporting Standard 102 ‘The
structure in place at these
responsibilities in accordance
Financial Reporting Standard
organisations involved obtaining
with these requirements. We
applicable in the UK and
and analysing the relevant
believe that the audit evidence
Republic of Ireland’ (United
control reports issued by the
we have obtained is sufficient
Kingdom Generally Accepted
independent service auditor of
and appropriate to provide a
Accounting Practice).
these entities in accordance with
basis for our opinion.
generally accepted assurance
In our opinion:
An overview of the scope of standards for such work.
 the financial statements give
our audit Following this assessment,
a true and fair view of the
We planned the scope of our we applied professional
state of the Company’s affairs
audit to ensure that we sufficient judgement to determine the
as at 30 June 2024 and of
audit evidence to give an extent of testing required over
the return for the year then
audit opinion on the financial each balance in the financial
ended;
statements as a whole, taking statements.
 the financial statements
into account the structure of
have been properly prepared
the Company, the accounting
in accordance with United
processes and controls, and the
Kingdom Generally Accepted
industry in which it operates.
Accounting Practice; and
The Company’s accounting
 the financial statements have
has been outsourced to J.P.
been prepared in accordance
Morgan Chase Bank N.A, who
64 Annual Report and Financial Statements 2024
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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 | Under ISA 240 there is a presumed | We have undertaken the |
| --- | --- | --- |
| revenue recognition | significant risk (that may be | following procedures to verify |
|  | rebutted) that revenue may be | the appropriateness of revenue |

Revenue for the
materially misstated due to improper recognition:
year is £1,198,000
revenue recognition. We have not
(2023: £984,000)  To test the occurrence of
rebutted this risk and therefore
and is disclosed in revenue, we traced dividend
are required to consider the risk
note 3 to the financial income from the accounting
of fraud in revenue recognition as
statements. records to dividend declarations
a significant risk and accordingly
and recalculated the expected
The accounting policy
respond to the risks of improper
dividend recognised. This was
for revenue is described
revenue recognition.
performed on a sample basis;
in note 2b(iv).
As per our assessment, there is a
 To assess the occurrence of
significant risk over the occurrence of
revenue, we agreed the receipt of
income. Due to the entity being listed
dividends to bank statements on
there is incentive to overstate income
a sample basis;
to improve reported performance.
 For a sample of accrued
This risk may also arise if income is
dividends, we assessed the date
recognised in the incorrect accounting
of the dividend declaration date
period through the application of
and whether the Company had
inappropriate accounting treatment.
proper legal title to recognise
For example inaccurate recognition
those dividends;
of income through the failure to
 We reviewed a sample of dividend
recognise proper income entitlements
income transactions occurring
or applying appropriate accounting
around the year-end date (either
treatment.
side of the reporting period end)
In addition to the above, the
to test the appropriate recognition
Directors are required to exercise
of dividend income around the
their judgement in determining
year end;
whether income receivable in the
form of special dividends should be
classified as “revenue” or “capital”.
for the year ended 30 June 2024 65
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## Independent Auditor’s Report continued
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 Based on the procedures performed, we gained satisfactory assurance
communicated to the over the appropriateness of the revenue recognition and did not identify any
Audit Committee matters or other observations to report to the audit committee.
66 Annual Report and Financial Statements 2024
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Strategic Report

Governance

Financial Statements

Company Information

|  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.  |   |

for the year ended 30 June 2024 67
Brown Advisory US Smaller Companies plc

# Independent Auditor's Report continued

## 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;

68 Annual Report and Financial Statements 2024
Strategic Report Governance Company InformationFinancial Statements

|  Considering the continuation | We have nothing to report on | financial year is consistent |
| --- | --- | --- |
| vote at the 2026 AGM; | the other information in the | with the financial statements; |
|  | Annual Report | and |

 Considering the current cash
The Directors are responsible for
position;  in our opinion those reports
the other information presented
have been prepared in
 Reviewing any litigation and
in the Annual Report together
accordance with the
claims against the Company;
with the financial statements.
Companies Act 2006.
 Considering the composition Our opinion on the financial
Directors’ remuneration
of the Company’s future cash statements does not cover the
report
flows and establishing they other information and, except to
are matched against revenue the extent otherwise explicitly In our opinion the part of the
income; and stated in this report, we do not directors’ remuneration report
express any form of assurance to be audited has been properly
 Considering the ability of the
conclusion thereon. prepared in accordance with the
key service organisations to
Companies Act 2006.
continue providing services Our responsibility is to read
to the Company. the other information and, in
Disclosures of emerging
doing so, consider whether principal risks, going concern
Based on the work performed,
the other information is and viability
we have not identified any
materially inconsistent with
material uncertainties relating We are required to perform
the financial statements or
to events or conditions that, procedures to identify
our knowledge obtained in the
individually or collectively, may whether there is a material
audit or otherwise appears
cast significant doubt on the inconsistency between the
to be materially misstated.
Company’s ability to continue as directors’ disclosures in respect
If we identify such material
a going concern for a period of at of emerging and principal risks,
inconsistencies or apparent
least twelve months from when going concern and the viability
material misstatements, we are
the financial statements are statement, and the financial
required to determine whether
authorised for issue. statements and our audit
there is a material misstatement
knowledge.
In relation to the Company’s
in the financial statements or
reporting on how it has applied Based on the knowledge we
a material misstatement of the
the UK Corporate Governance acquired during our financial
other information. If, based on
Code, we have nothing material statements audit, we have
the work we have performed, we
to add or draw attention to nothing material to add or draw
conclude that there is a material
in relation to the directors’ attention to in relation to:
misstatement of the other
statement in the financial
information we are required to  The Directors’ confirmation
statements about whether
report on that fact. set out on page 34 in the
the directors considered it
annual report that they
appropriate to adopt the going Strategic report and
have carried out a robust
concern basis of accounting. Directors’ report
assessment of the principal
Based solely on our work on the
Our responsibilities and the risks facing the Company,
other information:
responsibilities of the directors including those that would
with respect to going concern  we have not identified threaten its business
are described in the relevant material misstatements in model, future performance,
sections of this report. the strategic report and the solvency or liquidity and the
Directors’ report; disclosures in the annual
report set out on pages 34 to
 in our opinion the information
37 that describe the principal
given in those reports for the
for the year ended 30 June 2024 69
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## Independent Auditor’s Report continued
risks and explain how they are audit knowledge. that those items meet the
being managed or mitigated; following conditions:
Our work is limited to assessing

|  The Directors’ statement | these matters in the context of |  The Directors’ statement |
| --- | --- | --- |
| in the financial statements | only the knowledge acquired | in the financial statements |
| about whether they | during our financial statements | about whether they |
| considered it appropriate | audit. As we cannot predict | considered it appropriate |
| to adopt the going concern | all future events or conditions | to adopt the going concern |
| basis of accounting in | and as subsequent events may | basis of accounting in |
| preparing them, and | result in outcomes that are | preparing them, and |
| their identification of any | inconsistent with judgements | their identification of any |
| material uncertainties to the | that the above disclosures are | material uncertainties to the |
| Company’s ability to continue | materially consistent with the | Company’s ability to continue |
| to do so over a period of at | financial statements and our | to do so over a period of at |
| least 12 months from the date | audit knowledge. | least 12 months from the date |
| of approval of the financial |  | of approval of the financial |

Corporate Governance
statements; and statements;
disclosures
 The Directors’ viability  The Directors’ statement
We are required to perform
statement on page 34 in the on page 34 in the annual
procedures to identify whether
annual report as to how they report as to how they have
there is a material inconsistency
have assessed the prospects assessed the prospects of
between the directors’ corporate
of the Company, over what the Company, over what
governance disclosures and the
period they have done so and period they have done so and
financial statements and our
why they consider that period why they consider that period
audit knowledge.
to be appropriate, and their to be appropriate;
We have reviewed the directors’
statement as to whether they
 The Directors’ statement
statement in relation to going
have a reasonable expectation
as to whether they have a
concern, longer-term viability
that the Company will be able
reasonable expectation that
and that part of the Corporate
to continue in operation and
the Company will be able to
Governance Statement relating
meet its liabilities as they fall
continue in operation and
to the Company’s compliance
due over the period of their
meet its liabilities as they
with the provisions of the UK
assessment, including any
fall due over the period of
Corporate Governance Code
related disclosures drawing
their assessment, including
specified for our review by the
attention to any necessary
any related disclosures
Listing Rules.
qualifications or assumptions.
drawing attention to any
In this context, we also have
We are also required to review necessary qualifications or
nothing to report in regard to
the viability statement, set out assumptions.
our responsibility to specifically
on page 34 under the Listing
 The Directors’ confirmation
address the following items in
Rules. Based on the above
set out on page 34 in the
the other information and to
procedures, we have concluded
annual report that they
report as uncorrected material
that the above disclosures are
have carried out a robust
misstatements of the other
materially consistent with the
assessment of the principal
information where we conclude
financial statements and our
risks facing the Company,
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Strategic Report Governance Company InformationFinancial Statements

| including those that would | the Company’s compliance | records have not been kept |
| --- | --- | --- |
| threaten its business | with the UK Corporate | by the Company, or returns |
| model, future performance, | Governance Code containing | adequate for our audit have |
| solvency or liquidity and the | provisions specified for | not been received from |
| disclosures in the annual | review by the auditor in | branches not visited by us; or |
| report set out on pages 34 to | accordance with Listing Rule |  |

 the Company financial
37 that describe the principal 9.8.10R(2) do not properly
statements and the part of
risks and explain how they are disclose a departure from a
the directors’ remuneration
being managed or mitigated; relevant provision of the UK
report to be audited are
Corporate Governance Code.

|  The Directors’ statement |  | not in agreement with the |
| --- | --- | --- |
| on fair, balanced and | We are required to review | accounting records and |
| understandable set out on | the part of the Corporate | returns; or |
| page 49 – the statement | Governance Statement relating |  |

 certain disclosures of
given by the Directors to the Company’s compliance
directors’ remuneration
that they consider the with the provisions of the UK
specified by law are not
annual report and financial Corporate Governance Code
made; or
statements taken as a specified by the Listing Rules for
 we have not received all the
whole is fair, balanced and our review. We have nothing to
information and explanations
understandable and provides report in this respect.
we require for our audit; or
the information necessary
Matters on which we are
for shareholders to assess  a corporate governance
required to report by
the Company’s performance, statement has not been
exception
business model and strategy, prepared by the parent
In the light of the knowledge and
is materially inconsistent with company.
understanding of the Company
our knowledge obtained in
and its environment obtained Responsibilities of Directors
the audit; or
in the course of the audit, we As explained more fully in the
 The section of the Annual
have not identified material Directors’ Responsibilities
Report that describes the
misstatements in; Statement, the Directors are
review of effectiveness of risk
responsible for the preparation
 the Strategic Report or the
management and internal
of the financial statements and
Directors’ Report; or
control systems; or
for being satisfied that they
 the information about
 the Audit Committee report give a true and fair view, and
internal control and risk
set out on pages 56 to 58 for such internal control as the
management systems in
including the significant directors determine is necessary
relation to financial reporting
issues that the audit to enable the preparation
processes and about share
committee considered of financial statements
capital structures, given in
in relation to the financial that are free from material
compliance with rules 7.2.5
statements, and how these misstatement, whether due to
and 7.2.6 of the FCA Rules.
issues were addressed; and fraud or error.
We have nothing to report
 The Directors’ statement In preparing the financial
in respect of the following
of compliance with the UK statements, the directors are
matters in relation to which the
Corporate Governance responsible for assessing the
Companies Act 2006 requires
Code set out on page 52 – Company’s ability to continue
us to report to you if, in our
the parts of the Directors’ as a going concern, disclosing,
opinion:
statement required under as applicable, matters related to
the Listing Rules relating to  adequate accounting going concern and using going
for the year ended 30 June 2024 71
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## Independent Auditor’s Report continued
concern basis of accounting Explanation as to what extent  We gained an understanding
unless the directors either the audit was considered of the legal and regulatory
intend to liquidate the Company capable of detecting framework applicable to the
or to cease operations, or have irregularities, including fraud Company and the industry
no realistic alternative to do so. in which it operates, and
The objectives of our audit, in
considered the risk of acts
respect to irregularities including
Auditor’s responsibilities
by the Company which were
fraud are:
for the audit of the financial
contrary to applicable laws
statements  To identify and assess
and regulations, including
the risks of material
Our objectives are to obtain
fraud;
misstatement of the financial
reasonable assurance
 We considered the significant
statements due to fraud;
about whether the financial
laws and regulations to
statements as a whole are free
 To obtain sufficient
the Companies Act 2006,
from material misstatement,
appropriate audit evidence
the FCA listing and DTR
whether due to fraud or error,
regarding the assessed risks
rules, the principles of the
and to issue an auditor’s report
of material misstatement
AIC Code of Corporate
that includes our opinion.
due to fraud, through
Governance, industry
designing and implementing
Reasonable assurance is a
practice represented by the
appropriate responses; and
high level assurance, but not
AIC SORP, the applicable
a guarantee that an audit
 To respond appropriately accounting framework and
conducted in accordance with
to fraud or suspected fraud the Company’s qualification
ISAs (UK) will always detect
identified during the audit. as an investment trust
material misstatement when
under UK tax legislation as
However, the primary
it exists. Misstatements can
any non-compliance of this
responsibility for the prevention
arise from fraud or error and
would lead to the Company
and detection of fraud rests
are considered material if,
losing various deductions and
with both those charged with
individually or in aggregate, they
exemptions from corporation
governance of the entity and the
can reasonably be expected to
tax; and
entities delegated with the day-
influence the economic decisions
to-day responsibilities and the  We understood how the
of users taken on the basis of
outsourced service providers. Company is complying with
these financial statements.
those frameworks through
Irregularities, including fraud,
A further description of
discussions with the Audit
are instances of non-compliance
our responsibilities for
Committee and key service
with laws and regulations. We
the audit of the financial
providers in combination with
design procedures in line with
statements is located on the
a review of the Company’s
our responsibilities, outlined
Financial Reporting Council’s
documented policies and
above, to detect material
website at: www.frc.org.uk/
procedures.
misstatements in respect
auditorsresponsibilities. This
of irregularities, including We focused on laws and
description forms part of our
fraud. The extent to which our regulations that could give rise to
auditor’s report.
procedures are capable of a material misstatement in the
detecting irregularities, including Company financial statements.
fraud is detailed below: Our tests included:
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Strategic Report Governance Company InformationFinancial Statements
 Agreement of the financial  Evaluating controls designed Company and the Company’s
statement disclosures to prevent and detect members as a body, for our
to underlying supporting irregularities; and audit work, for this report, or for
documentation; the opinions we have formed.
 Identifying and testing
 Enquiries of management journals, in particular
and those charged with manual journal entries
governance relating to posted through revenue
the existence of any non- and investments, postings
compliance with laws and containing unusual phrases
Laura Mott
regulations; or with unusual descriptions.
Senior Statutory Auditor
 Review of minutes of board for and on behalf of
Other matters we are
meetings throughout the Haysmacintyre LLP Statutory
required to address
period to identify and Auditor, Chartered Accountants
Following recommendation of
instance of non-compliance London
the Audit Committee, we were
with laws and regulations;
20 September 2024
appointed by the Shareholders
and
to audit the financial statements

|  Reviewing the calculation in | for the year ending 30 June |
| --- | --- |
| relation to Investment Trust | 2020 and subsequent financial |
| compliance to check that | periods. The period of total |
| the Company was meeting | uninterrupted engagement is |
| its requirements to retain its | therefore five years. |

Investment Trust status.
The non-audit services
We evaluated the Directors and prohibited by the FRC’s Ethical
key service providers incentives Standard were not provided to
and opportunities for fraudulent the Company and we remain
manipulation of the financial independent of the Company in
statements (including the risk conducting our audit.
of override of controls) and
Our audit opinion is consistent
determined that the occurrence
with the additional report to the
of fraud is low given the activities
Audit Committee.
and operations of the Company.

| If fraud were to occur it would | Use of our report |
| --- | --- |
| likely be collusive in nature | This report is made solely to the |
| and probably occur through | Company’s members, as a body, |
| posting inappropriate manual | in accordance with Chapter 3 |
| journal entries to revenue and | of Part 16 of the Companies |
| investments. Audit procedures | Act 2006. Our audit work has |
| performed by the engagement | been undertaken so that we |
| team included: | might state to the Company’s |

members those matters we are
 Discussions with Audit
required to state to them in an
Committee and key
auditor’s report and for no other
service providers including
purpose. To the fullest extent
consideration of known or
permitted by law, we do not
suspected instances of non-
accept or assume responsibility
compliance with laws and
to anyone other than the
regulation and fraud;
for the year ended 30 June 2024 73
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Strategic Report Governance Report Financial Statements Company Information Strategic Report Governance Report Financial Statements Company Information
## Financial Statements
for the year ended 30 June 2024 75
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## Statement of Comprehensive Income
for the year ended 30 June 2024
2024 2023

|  | Revenue |  | Capital |  | Revenue |  | Capital |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  | Return | Return | Total |  | Return | Return | Total |
| Note |  | £’000 | £’000 | £’000 |  | £’000 | £’000 | £’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.
The Notes on pages 81 to 92 form part of these Financial Statements.
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Strategic Report

Governance Report

Financial Statements

Company Information

# Statement of Financial Position

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

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

for the year ended 30 June 2024 77
Brown Advisory US Smaller Companies plc
## Statement of Changes in Equity
for the year ended 30 June 2024

|  |  | Called up |  |  |  |  |  | Non- |  | Capital |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  | Share |  | Share | distributable |  |  | Redemption |  | Capital |  | Revenue |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  | † |  | † |  |
|  |  |  | Capital | Premium |  |  | Reserve |  |  | Reserve | Reserve |  | Reserve* |  | Total |
| for the year ended 30 June 2024 | Note |  | £’000 |  | £’000 |  |  | £’000 |  | £’000 | £’000 |  | £’000 |  | £’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

|  |  | Called up |  |  |  |  |  | Non- |  | Capital |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  | Share |  | Share | distributable |  |  | Redemption |  | Capital | Revenue |  |
|  |  |  | Capital | Premium |  |  | Reserve |  |  | Reserve | reserve | reserve* | Total |
| for the year ended 30 June 2023 | Note |  | £’000 |  | £’000 |  |  | £’000 |  | £’000 | £’000 | £’000 | £’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.
78 Annual Report and Financial Statements 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
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Company Information

# Statement of Cash Flows

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**  |

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

for the year ended 30 June 2024 79
Brown Advisory US Smaller Companies plc
## Statement of Cash flows continued
Reconciliation of net cash outflow from operating activities
2024 2023
Note £’000 £’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 |  |  |  |  | At 30 June |  |
| --- | --- | --- | --- | --- | --- | --- |
|  | 2023 | Cash Flow |  | Non-cash |  | 2024 |
|  | £’000 |  | £’000 | movements |  | £’000 |

Cash at bank 12,444 (2,657) (65) 9,722
12,444 (2,657) (65) 9,722
The Notes on pages 81 to 92 form part of these Financial Statements.
80 Annual Report and Financial Statements 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
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.

for the year ended 30 June 2024 81
Brown Advisory US Smaller Companies plc
## Notes to the Financial Statements continued

| 2. Accounting policies | as to what inputs other market | at the rates of exchange |
| --- | --- | --- |
| (continued) | participants would apply in | prevailing at the respective |
|  | pricing the same or similar | dates of such transactions. |

Accounting standards
instruments. Included within
recognise a hierarchy of fair Foreign exchange profits
this category are unquoted
value measurements for and losses on fixed asset
investments.
financial instruments which investments are included
gives the highest priority to (ii) Fixed asset investments within the changes in fair
unadjusted quoted prices in As an investment trust, the value in the capital account.
active markets for identical Company measures its fixed
Foreign exchange profits and
assets or liabilities (level 1) asset investments at “fair
losses on other currency
and the lowest priority to value through profit or loss”
balances are separately
unobservable inputs (level 3). and treats all transactions
credited or charged to the
The classification of financial on the realisation and
capital account except where
instruments depends on the revaluation of investments as
they relate to revenue items
lowest significant applicable transactions on the capital
when they are credited or
input, as follows: account. Purchases are
charged to the revenue
recognised on the relevant
Level 1 – Unadjusted, fully account.
trade date, inclusive of
accessible and current quoted
(iv) Income
expenses which are incidental
prices in active markets for
Income from equity shares
to their acquisition. Sales
identical assets or liabilities.
is brought into the revenue
are also recognised on the
Included within this category
account (except where, in the
trade date, after deducting
are investments listed on any
opinion of the Directors, its
expenses incidental to the
recognised stock exchange.
nature indicates it should be
sales.
Level 2 – Quoted prices for recognised within the capital
Quoted investments are valued
similar assets or liabilities, account) on the ex-dividend
at bid value at the close of
or other directly or indirectly date or, where no ex-dividend
business on the relevant date
observable inputs which exist date is quoted, when the
on the exchange on which the
for the duration of the period of Company’s right to receive
investment is quoted.
investment. Examples of such payment is established.
instruments would be those for (iii) Foreign currency
Dividends from overseas
which the quoted price has been Monetary assets, monetary
companies are shown gross
recently suspended, forward liabilities and equity
of withholding tax.
exchange contracts and certain investments denominated
other derivative instruments. Where the Company
in a foreign currency are
has elected to receive its
expressed in sterling at
Level 3 – External inputs are
dividends in the form of
rates of exchange ruling at
unobservable.
additional shares rather than
the Statement of Financial
Fair value is the Directors’ best in cash (scrip dividends), the
Position date. Purchases
estimate, based on advice from amount of the cash dividend
and sales of investment
relevant knowledgeable experts, foregone is recognised as
securities, dividend income,
use of recognised valuation income. Any excess in the
interest income and
techniques and on assumptions value of the shares received
expenses are translated
82 Annual Report and Financial Statements 2024
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over the amount of the Deferred tax assets are only  realised and unrealised
cash dividend foregone is recognised if it is considered foreign exchange differences
recognised in the capital more likely than not that there of a capital nature;
account. will be suitable profits from
 tax charges associated with
which the future reversal of
(v) Expenses, including transactions of a capital
timing differences can be
finance charges nature;
deducted.
Expenses are charged to
 costs of professional
the revenue account of the In line with the
advice, including related
Income Statement, except as recommendations of the
irrecoverable VAT, relating to
noted below: SORP, the allocation method
the capital structure of the
used to calculate the tax
– expenses incidental to the Company;
relief on expenses charged
acquisition or disposal of
 other capital charges and
to capital is the “marginal”
fixed asset investments
credits charged or credited
basis. Under this basis, if
are included within the
to this account in accordance
taxable income is capable
cost of the investments or
with the above policies; and
of being offset entirely by
deducted from the disposal
expenses charged through  the costs of purchasing
proceeds of investments
the revenue account, then no Ordinary share capital.
and are thus charged to
tax relief is transferred to the
the capital element of Revenue return
capital account.
retained earnings – arising  the income return or loss
on investments sold via the (vii) Capital redemption for the year is taken to the
capital account; and reserve income element of this
The nominal value of reserve.
– all expenses are accounted
Ordinary share capital
for on an accruals basis. This element of the retained
purchased and cancelled is
Finance charges are earnings reserve may be
transferred out of called-up
accrued using the effective used to fund the distribution
share capital and into the
interest rate method. of profits to investors via
capital redemption reserve.
dividend payments only
(vi) Taxation
Capital redemption reserve is when this is in a surplus
Withholding tax deducted at
not available for the payment position. Currently there is
source from income received
of dividends. an accumulated loss and
is treated as part of the
therefore no distributions can
taxation charge in the income (viii) Retained earnings
be paid.
account, in instances where it This consists of the following:
cannot be recovered. (c) Significant accounting
Capital return
judgements, estimates
Deferred tax is provided in The following are accounted
and assumptions
accordance with FRS 102, on for in this reserve:
The preparation of the
an undiscounted basis, on all
 gains and losses on the
Company’s Financial
timing differences that have
realisation of fixed asset
Statements on occasion
originated but not reversed
investments;
requires management to
by the Statement of Financial
 increases and decreases in make judgements, estimates
Position date, based on the
the valuation of fixed asset and assumptions that affect
tax rates that are expected to
investments held at the year
apply in the period when the
end;
liability is settled or the asset
realised.
for the year ended 30 June 2024 83
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
## Notes to the Financial Statements continued

| 2. Accounting policies |  | that require a material | accounting judgements or |
| --- | --- | --- | --- |
| (continued) |  | adjustment to the carrying | estimates have been applied |
|  | the reported amounts in the | amount of assets or liabilities | to these Financial Statements |
|  | primary financial statements | affected in the current and | other than the allocations |
|  | and the accompanying | future periods, depending on | between capital and revenue |
|  | disclosures. These | circumstance. | shown in Notes 4 and 5. |

assumptions and estimates
Management do not
could result in outcomes
believe that any significant
3. Income
2024 2023
£’000 £’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 | Capital |  | Revenue | Capital |  |
| --- | --- | --- | --- | --- | --- |
| Return | Return | Total | Return | Return | Total |
| £’000 | £’000 | £’000 | £’000 | £’000 | £’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.
84 Annual Report and Financial Statements 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
Strategic Report Governance Report Financial Statements Company Information
5. Other expenses
2024 2023

| Revenue | Capital |  | Revenue | Capital |  |
| --- | --- | --- | --- | --- | --- |
| Return | Return | Total | Return | Return | Total |
| £’000 | £’000 | £’000 | £’000 | £’000 | £’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 | Capital |  | Revenue |  | Capital |  |
| --- | --- | --- | --- | --- | --- | --- |
| Return | Return | Total |  | Return | Return | Total |
| £’000 | £’000 | £’000 |  | £’000 | £’000 | £’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 | Capital |  | Revenue |  | Capital |  |
| --- | --- | --- | --- | --- | --- | --- |
| Return | Return | Total |  | Return | Return | Total |
| £’000 | £’000 | £’000 |  | £’000 | £’000 | £’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)
for the year ended 30 June 2024 85
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

# Notes to the Financial Statements continued

## 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**  |

86 Annual Report and Financial Statements 2024
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**  |

for the year ended 30 June 2024 87
Brown Advisory US Smaller Companies plc

# Notes to the Financial Statements continued

## 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**  |

## 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.

88 Annual Report and Financial Statements 2024
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
At Average At Average
30 June for the year 30 June 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 |  | Impact on |  |  | Impact on |  | Impact on |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | revenue |  | capital |  |  | revenue |  | capital |  |
|  | return |  | return | Total |  | return |  | return | Total |
|  | £’000 |  | £’000 | £’000 |  | £’000 |  | £’000 | £’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 |  | Impact on |  |  | Impact on |  | Impact on |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | revenue |  | capital |  |  | revenue |  | capital |  |
|  | return |  | return | Total |  | return |  | return | Total |
|  | £’000 |  | £’000 | £’000 |  | £’000 |  | £’000 | £’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
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
Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
Brown Advisory US Smaller Companies plc
## Notes to the Financial Statements continued
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).
(c) Interest rate risk
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 |  |  | No |  | Cash flow |  |  | No |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  | interest | interest |  |  |  | interest | interest |  |  |
|  | rate risk | rate risk |  | Total | rate risk |  | rate risk |  | Total |
|  | £’000 | £’000 |  | £’000 |  | £’000 | £’000 |  | £’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

|  |  | Non-interest |  |  |  |  | Non-interest |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Fixed rate |  |  | bearing | Total | Fixed rate |  |  | bearing | Total |
|  | £’000 |  | £’000 | £’000 |  | £’000 |  | £’000 | £’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
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Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
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**  |

for the year ended 30 June 2024 91
Brown Advisory US Smaller Companies plc
## Notes to the Financial Statements continued
14. Net asset value per Transactions with the Portfolio fee the amounts due to it
Ordinary share Manager and the AIFM as AIFM and for company
secretarial services and shall pay
FundRock Partners Limited is
The net asset value per Ordinary
the balance to Brown Advisory.
AIFM to the Company pursuant
share is based on the net
to an Alternative Investment The management fee is
assets attributable to the equity
Fund Management Agreement calculated and payable on a
shareholders of £174,544,000
between FundRock Partners quarterly basis.
(2023: £171,147,000) and on
Limited and the Company.
11,862,159 (2023: 11,952,159)
The management fee payable to
FundRock Partners Limited has
Ordinary shares, being the
FundRock Partners Limited for
also been appointed to provide
number of Ordinary shares in
the period from 1 July 2023 to
company secretarial services to
issue at the year end.
30 June 2024 was £1,222,000
the Company.
15. Related parties and (payable to FundRock Partners
Brown Advisory is appointed to
transactions with the Limited for the period from
provide portfolio management
Portfolio Manager and the 1 July 2022 to 30 June 2023:
services pursuant to a Portfolio
AIFM £1,172,000) with £303,000
Management Agreement
outstanding as at 30 June 2024
Directors between the Company,
(2023: £298,000).
FundRock Partners Limited and
There are no transactions
The appointment of Brown
Brown Advisory.
with the Directors other than
Advisory and FundRock Partners
aggregated remuneration The management fee is
Limited may be terminated by
for services as Directors as calculated at an annual rate of
not less than six months’ notice.

| disclosed in the Directors’ | 0.7% on the first £200 million; |  |
| --- | --- | --- |
| Remuneration Report on | 0.6% of the next £300 million; | 16. Contingent liabilities and |
| page 61 and as set out in Note | and 0.5% thereafter of the | capital commitments |
| 5 to the Financial Statements | Company’s adjusted net assets. |  |

There were no contingent
on page 85 and the beneficial
The management fee is payable liabilities or capital
interests of the Directors in the
by the Company to FundRock commitments outstanding at
Ordinary shares of the Company
Partners Limited, who shall 30 June 2024 (2023: nil).
as disclosed on page 62.
deduct from the management
92 Annual Report and Financial Statements 2024
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Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600
Strategic Report Governance Report Company InformationFinancial Statements
## Company Information
for the year ended 30 June 2024 93
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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

# 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

94 Annual Report and Financial Statements 2024
Strategic Report

Governance Report

Financial Statements

Company Information

## 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.

for the year ended 30 June 2024 95
Brown Advisory US Smaller Companies plc
## Notice of Annual General Meeting

| This Notice of Meeting is an | 6. That Mr S White be re- |  | make an offer or agreement |
| --- | --- | --- | --- |
| important document. If you |  | elected as a Director of the | which would or might |
| are in any doubt as to what |  | Company. | require shares to be allotted |
| action to take, you should |  |  | after such expiry and the |

7. That Haysmacintyre be re-
consult an appropriate Directors may allot shares in
appointed as Auditor of the
independent adviser. pursuance of such an offer or
Company.
agreement as if the authority
Notice is hereby given that
8. That the Directors be
hereby conferred had not
the Annual General Meeting
authorised to agree the
expired.
of Brown Advisory US Smaller
remuneration of the Auditor.
Companies PLC will be held at
Special Resolutions:
the offices of Brown Advisory Special Business
10. That the Directors of the
LLC, 18 Hanover Square,
To consider, and if thought fit, to
Company be and are hereby
London W1S 1JY on Monday,
pass Resolution 9 as an Ordinary
granted power pursuant to
4 November 2024 at 2:00 p.m.
Resolution and Resolutions 10 to
Section 570 and/or Section
for the following purposes:
12 as Special Resolutions:
573 of the Companies Act
2006 (‘the Act’) to allot
Ordinary Business
Ordinary Resolutions:
equity securities (within the
To consider and, if thought fit,
9. That the Directors of the
meaning of Section 560
pass the following as Ordinary
Company be and are hereby
of the Act) for cash either
Resolutions:
generally and unconditionally
pursuant to the authority
1. That the Report of the authorised for the purposes
conferred by Resolution 9 or
Directors and the audited of Section 551 of the
by way of a sale of Treasury
Financial Statements of the Companies Act 2006
shares, as if Section 561 of
Company for the year ended (‘the Act’), in substitution
the Act did not apply to any
30 June 2024 be received for and to the exclusion of
such allotment, provided that
and adopted. any outstanding authority
this power shall be limited to:
previously conferred on the
2. That the Directors’
(a) the allotment of equity
Directors under Section 551
Remuneration Report for the
securities up to an
of the Act, to allot shares in
year ended 30 June 2024 be
aggregate nominal
the capital of the Company
approved.
amount of £296,553
(‘shares’) up to a maximum
(being 10% of the
3. That Ms R Beechey be aggregate nominal
Company’s issued
elected as a Director of the amount of approximately
share capital (excluding
Company. £296,553 (being 10% of the
Treasury shares)); and
Company’s issued share
4. That Mr J Judd be re-elected
capital (excluding Treasury
as a Director of the Company.
shares)) provided that this
5. That Ms J Routledge be
authority shall expire at the
re-elected as a Director of
conclusion of the Annual
the Company.
General Meeting of the
Company to be held in 2025
save that the Company
may, before such expiry,
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Strategic Report Governance Report Company InformationFinancial Statements

| (b) in addition to the |  | 11. That the Company be and is |  | which such share is |
| --- | --- | --- | --- | --- |
|  | authority referred to in |  | generally and unconditionally | purchased; and |
|  | (a) above, in connection |  | authorised in accordance |  |

(ii) the higher of the
with an offer of equity with Section 701 of the
price of the last
securities by way of a Companies Act 2006 (the
independent trade and
rights issue or open offer ‘Act’) to make one or more
the highest current
to Ordinary shareholders market purchases (within the
independent bid as
in proportion as nearly meaning of Section 693 of
stipulated by Article
as may be practicable the Act) of Ordinary shares
5(1) of Commission
to their existing holdings provided that:
Regulation EC 22
subject to such limits
(a) the maximum number December 2003
or restrictions or
of shares that may be implementing the
other arrangements
purchased is 1,778,137 Market Abuse
as the Directors may
Ordinary shares, being Directive as regards
deem necessary or
14.99% of the issued exemptions for buy-
expedient to deal with
number of shares back programmes and
any Treasury shares,
(excluding Treasury stabilisation of financial
fractional entitlements
shares) at the date of instruments (No.
or securities represented
this document or, if 2273/2003); and
by depositary receipts,
lower, such number
(d) unless renewed, this
record dates, legal,
as is equal to 14.99%
authority shall expire
regulatory or practical
of the issued number
at the conclusion
problems in, or under
of shares (excluding
of the next Annual
the laws or requirements
Treasury shares) at
General Meeting of the
of, any territory or the
the date of passing the
Company to be held
requirements of any
resolution;
in 2025 save that the
regulatory body or stock
(b) the minimum price Company may, prior to
exchange or any other
which may be paid such expiry, enter into
matter, and provided
shall be each of their a contract to purchase
that this authority shall
respective nominal shares which will or
expire at the conclusion
values; may be completed or
of the Annual General
executed wholly or
Meeting of the Company (c) the maximum price
partly after such expiry.
to be held in 2025 save (excluding the expenses
that the Company of such purchase) which
12. That a General Meeting other
may, before such may be paid for each
than an Annual General
expiry, make an offer Ordinary share is the
Meeting may be called on
or agreement which higher of:
not less than 14 clear days’
would or might require
notice.
(i) 105% of the average
equity securities to be
middle market By Order of the Board
allotted after such expiry
quotations for such FundRock Partners Limited
and the Directors may
Ordinary share taken Company Secretary
allot equity securities in
from the London Stock
pursuance of such an 3 October 2024
Exchange Daily Official
offer or agreement as
List for the five business
if the authority hereby
days immediately
conferred had not
preceding the day on
expired.
for the year ended 30 June 2024 97
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Brown Advisory US Smaller Companies plc
## Notes for the Annual General Meeting

| 1. A Member entitled to attend |  | vote at the shareholders AGM | on 4 November 2024 and any |
| --- | --- | --- | --- |
|  | and vote may appoint a proxy | (and for the purpose of the | adjournment(s) thereof by using |
|  | or proxies to attend, speak | determination by the Company | the procedures described in |
|  | and vote instead of him or | of the number of votes they | the CREST Manual. CREST |
|  | her. A proxy need not be a | may cast), Members must be | Personal Members or other |
|  | member of the Company. | entered on the Company’s | CREST sponsored members, |
|  | A form of proxy is enclosed | Register of Members at | and those CREST members |
|  | which, if used, must be lodged | 2:00 p.m. on 31 October 2024. | who have appointed a voting |
|  | at the Company’s Registrars, | If the meeting is adjourned | service provider(s), should refer |
|  | Computershare Investor | then, to be so entitled, | to their CREST sponsor or voting |
|  | Services PLC, The Pavilions, | Members must be entered | service provider(s), who will be |
|  | Bridgwater Road, Bristol BS99 | on the Company’s Register of | able to take the appropriate |
|  | 6ZY not less than forty-eight | Members at the time which is | action on their behalf. |
|  | hours before the meeting. | 48 hours before the time fixed |  |

7. In order for a proxy
Alternatively you can appoint a for the adjourned meeting or,
appointment or instruction
proxy electronically by visiting if the Company gives notice of
made using the CREST service
www.eproxyappointment.com. the adjourned meeting, at the
to be valid, the appropriate
You will be asked to enter time specified in that notice.
CREST message (a ‘CREST
the Control Number, the
3. As at 16 September 2024 Proxy Instruction’) must be
Shareholder Reference Number
(being the latest practicable properly authenticated in
and PIN which are printed on
date prior to the publication accordance with CRESTCo’s
the form of proxy or contained
of this notice) the Company’s specifications and must contain
within the email sent to you. To
issued share capital was the information required for
appoint more than one proxy
18,223,413 Ordinary shares such instructions, as described
you may photocopy this form.

|  |  | and the total voting rights were | in the CREST Manual. The |
| --- | --- | --- | --- |
| You may appoint a person other |  | 11,862,159. | message, regardless of whether |
|  | than the Chairman as your |  | it constitutes the appointment |

4. The vote ‘Withheld’ is provided
proxy. Please indicate the proxy of a proxy or an amendment
to enable you to abstain on any
holder’s name and the number to the instruction given to a
particular resolution. However,
of shares in relation to which previously appointed proxy
it should be noted that a
they are authorised to act as must, in order to be valid,
‘Withheld’ vote is not a vote in
your proxy (which, in aggregate, be transmitted so as to be
law and will not be counted in
should not exceed the number received by the Company’s
the calculation of the proportion
of shares held by you). Please agent ID (3RA50) by the latest
of the votes ‘For’ and ‘Against’ a
also indicate if the proxy time(s) for receipt of proxy
resolution.
instruction is one of multiple appointments specified in the
5. The completion and return of
instructions being given. All Notice of Meeting.
this form will not preclude a
forms must be signed and
For this purpose, the time
Member from attending the
should be returned together in
of receipt will be taken to be
meeting and voting in person.
the same envelope.
the time (as determined by
6. CREST members who wish
2. Pursuant to Regulation the timestamp applied to
to appoint a proxy or proxies
41 of the Uncertificated the message by the CREST
through the CREST electronic
Securities Regulations 2001, Applications Host) from
proxy appointment service
the Company specifies that which the Company’s agent is
may do so for the Annual
to be entitled to attend and able to retrieve the message
General Meeting to be held
98 Annual Report and Financial Statements 2024
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Strategic Report Governance Report Company InformationFinancial Statements

| by enquiry to CREST in the | Proxy Instruction in the | 8. If you have disposed of your |  |
| --- | --- | --- | --- |
| manner prescribed by CREST. | circumstances set out in |  | holding in the Company this |
| After this time any change | Regulation 35(5)(a) of the |  | document should be passed |
| of instructions to proxies | Uncertificated Securities |  | on to the person through |
| appointed through CREST | Regulations 2001. |  | whom the sale or transfer was |
| should be communicated to |  |  | effected for transmission to the |

Any corporation which is a
the appointee through other purchaser or transferee.
Member can appoint one or
means.

|  |  | more corporate representatives | 9. Any person to whom this |  |
| --- | --- | --- | --- | --- |
| CREST members and, where |  | who may exercise on its |  | Notice is sent who is a person |
|  | applicable, their CREST | behalf all of its powers as a |  | nominated under Section 146 |
|  | sponsors or voting service | Member provided that, if it |  | of the Companies Act 2006 |
|  | providers should note that | is appointing more than one |  | to enjoy information rights (a |
|  | CRESTCo does not make | corporate representative, it |  | Nominated Person) may, under |
|  | available special procedures | does not do so in relation to the |  | an agreement between him/ |
|  | in CREST for any particular | same shares. It is therefore no |  | her and the shareholder by |
|  | messages. Normal system | longer necessary to nominate |  | whom he/she was nominated, |
|  | timings and limitations will | a designated corporate |  | have a right to be appointed |
|  | therefore apply in relation | representative. Representatives |  | (or to have someone else |
|  | to the input of CREST | should bring to the meeting |  | appointed) as a proxy for the |
|  | Proxy Instructions. It is the | evidence of their appointment, |  | Meeting. If a Nominated Person |
|  | responsibility of the CREST | including any authority under |  | has no such proxy appointment |
|  | member concerned to take | which it is signed. |  | right or does not wish to |
|  | (or, if the CREST member is |  |  | exercise it, he/she may, under |

If you are an institutional
a CREST personal member any such agreement, have a
investor you may be able to
or sponsored member or has right to give instructions to the
appoint a proxy electronically
appointed a voting service shareholder as to the exercise
via the Proxymity platform,
provider(s), to procure that of voting rights.
a process which has been
his CREST sponsor or voting
agreed by the Company and 10. A copy of the Notices of
service provider(s) take(s))
approved by the Registrar. For Meetings and other information
such action as shall be
further information regarding required by section 311A of the
necessary to ensure that a
Proxymity, please go to www. Companies Act 2006, can be
message is transmitted by
proxymity.io. Your proxy must found at www.brownadvisory.
means of the CREST system
be lodged by 2:00 p.m. on com/basc.
by any particular time. In this
31 October 2024 in order to
connection, CREST members
be considered valid. Before
and, where applicable,
you can appoint a proxy via
their CREST sponsors or
this process you will need to
voting service providers are
have agreed to Proxymity’s
referred, in particular, to those
associated terms and
sections of the CREST Manual
conditions. It is important that
concerning practical limitations
you read these carefully as
of the CREST system and
you will be bound by them and
timings.
they will govern the electronic
The Company may appointment of your proxy.
treat as invalid a CREST
for the year ended 30 June 2024 99
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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
## Notes for the Annual General Meeting continued

| 11. Pursuant to Section 319A of |  | hard copy or electronic form, | cover any costs incurred |
| --- | --- | --- | --- |
|  | the Companies Act 2006, | must identify the resolution | in complying with Section |
|  | the Company must cause | of which notice is to be given | 527 or 528 and is required |
|  | to be answered at the AGM | or the matter to be included | to forward any statement |
|  | any question relating to the | in the business, must be | placed on a website to the |
|  | business being dealt with at the | accompanied by a statement | Company’s auditor not |
|  | AGM which is put by a Member | setting out the grounds for the | later than the time when |
|  | attending the Meeting except | request, must be authenticated | it makes the statement |
|  | in certain circumstances, | by the person(s) making it | on the website. |
|  | including if it is undesirable in | and must be received by the |  |

The business which may be
the interests of the Company Company not later than the
dealt with at the meeting
or the good order of the date that is six clear weeks
includes any statements
Meeting or if it would involve before the Meeting, and (in the
that the Company has been
the disclosure of confidential case of a matter to be included
required under Section 527
information. in the business only) must be
of the Act to publish on a
accompanied by a statement
12. Under Sections 338 and 338A website.
setting out the grounds for the
of the 2006 Act, Members
14. Shareholders are advised that,
request.
meeting the threshold
unless otherwise stated, any
requirements in those sections 13. Under Section 527 of the Act,
telephone number, website
have the right to require shareholders meeting the
and email address set out in
the Company: (i) to give, to threshold requirement set
this Notice of Meeting, Form of
Members of the Company out in that section have the
Proxy, or Annual Report should
entitled to receive notice of the right to require the Company
not be used for the purpose
Meeting, notice of a resolution to publish on a website a
of serving information on the
which those Members intend to statement setting out any
Company (including the service
move (and which may properly matter relating to:
of documents or information
be moved) at the Meeting;
(i) The audit of the Company’s relating to the proceedings
and/or (ii) to include in the
Financial Statements at the Company’s AGM).
business to be dealt with at the
(including the auditor’s
Meeting any matter (other than
report and the conduct of
a proposed resolution) which
the audit) that are to be
may properly be included in
laid before the meeting;
the business at the Meeting.
or (ii) any circumstances
A resolution may properly be
connected with the auditor
moved, or a matter properly
of the Company ceasing
included in the business unless:
to hold office since the
(a) (in the case of a resolution
previous AGM at which
only) it would, if passed, be
the annual financial
ineffective (whether by reason
statements and reports
of any inconsistency with any
were laid in accordance
enactment or the Company’s
with Section 437 of the Act.
constitution or otherwise);
The Company may not
(b) it is defamatory of any
require the shareholders
person; or (c) it is frivolous or
requesting any such
vexatious. A request made
website publication to
pursuant to this right may be in
100 Annual Report and Financial Statements 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
Strategic Report

Governance Report

Financial Statements

Company Information

# 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.

for the year ended 30 June 2024 101
Brown Advisory US Smaller Companies plc

# Investor Information continued

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 register your account at https://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.

102 Annual Report and Financial Statements 2024
Strategic Report Governance Report Company InformationFinancial Statements
## Important Risk Warnings
Advice to shareholders You can avoid investment If you are suspicious, report it.
scams by:

| In recent years investment |  |  You can report the firm |
| --- | --- | --- |
| related scams have become |  Rejecting unexpected offers | or scam to the FCA by |
| increasingly sophisticated and | – Scammers usually cold call | contacting their Consumer |
| difficult to spot. We are therefore | but contact can also come by | Helpline on 0800 111 6768 |
| warning all our shareholders | email, post, word of mouth | or using their online reporting |
| to be cautious so that they can | or at a seminar. If you have | form. |
| protect themselves and spot the | been offered an investment |  |

 If you have lost money in a
warning signs. out of the blue, chances are
scam, contact Action Fraud
it’s a high-risk investment or
Fraudsters will often: on 0300 123 2040 or visit
a scam.
www.actionfraud.police.uk
 contact you out of the blue
 Checking the FCA Warning
For further helpful information
 apply pressure to invest
List – Use the FCA Warning
about investment scams and
quickly
List to check the risks of a
how to avoid them please visit
 downplay the risks to your potential investment. You
www.fca.org.uk/scamsmart
money can also search to see if
the firm is known to be
 promise tempting returns
operating without proper FCA
that sound too good to be
authorisation.
true
 Getting impartial advice –
 say that they are only making
Before investing get impartial
the offer available to you
advice and don’t use an
 ask you to not tell anyone else
adviser from the firm that
about it
contacted you.
for the year ended 30 June 2024 103
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
## Company Information

| Directors Stephen White, Chairman |  | Registrars Computershare Investor |  |
| --- | --- | --- | --- |
|  | Ruth Beechey (from 1 July 2024) |  | Services PLC |
|  | Lisa Booth |  | The Pavilions, Bridgwater |
|  | Jasper Judd |  | Road, B ristol BS99 6ZZ |

Clive Parritt (until 30 June 2024)
Telephone 0370 889 4089
Jane Routledge
Website www.investorcentre.co.uk

| Registered | 6th Floor, 125 London Wall, |  |  |
| --- | --- | --- | --- |
|  |  | Company | 02781968 |
| Office | London EC2Y 5AS |  |  |
|  |  | Registration | Registered in England & Wales |
| Portfolio | Brown Advisory LLC |  |  |
|  |  | Number | An investment company under |
| Manager | 901 South Bond Street, |  |  |

s.833 of the Companies Act
Suite 400, Baltimore,
2006
Maryland 21231 United States
Investor The Ordinary shares of the
Alternative FundRock Partners Limited
Codes Company are traded on the
Investment Hamilton Centre, Rodney Way,
London Stock Exchange.
Fund Chelmsford, Essex CM1 3BY
Sedol 0346340
Manager
Authorised and regulated
Number
(AIFM)
by the Financial Conduct
Ordinary
Authority
shares

| Company | FundRock Partners Limited |  |  |
| --- | --- | --- | --- |
|  |  | ISIN | GB0003463402 |
| Secretary | Hamilton Centre, Rodney Way, |  |  |

Number
Chelmsford, Essex CM1 3BY
Ordinary

| Registered | Haysmacintyre LLP | shares |  |
| --- | --- | --- | --- |
| Auditor | 10 Queen Street Place, |  |  |
|  |  | Ticker | BASC |

London, EC4R 1AG
Ordinary
Telephone +44 (0)20 3994 7129 shares
Website www.brownadvisory.com/basc
The Company
Email InvestmentTrustEnquiries@
is a member of:
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
104 Annual Report and Financial Statements 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
Job No: 52458 Proof Event: 19 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA 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 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 Brown Advisory US Smaller Companies PLC
6th Floor
### Annual Report and Financial Statements
125 London Wall
### for the year ended 30 June 2024
London EC2Y 5AS
Job No: 52458 Proof Event: 19 Black Line Level: 2 Park Communications Ltd Alpine Way London E6 6LA 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 Customer: Brown Advisory Project Title: Annual Report 2024 T: 0207 055 6500 F: 020 7055 6600